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War Fears Boost Oil, And Gas Goes Along for the Ride
Bombing Iraq seemed as reasonable an explanation as any for whymost cash markets were rising in the neighborhood of a dimeWednesday. Weather was getting a little colder but still relativelymild for this time of year, so it’s not like there’s any big surgein gas demand, a marketer said. The AGA storage report of 49 Bcf inwithdrawals last week, which came too late to affect Wednesday’strading, was approximately in the middle of most expectations andthus neither bearish nor bullish.
More than one source was paying attention to television coverageof U.S. air raids against Iraq (“just watching Baghdad light up atnight on CNN” is how one greeted Daily GPI’s call). Another pointedout the action was boosting oil prices (January crude futures rose83 cents Wednesday to close at $12.38/barrel), “so I guess it’shelping gas prices also.”
The only point registering a big drop was the same one that hadspiked incredibly high the day before-Sumas. But even though quotesthere fell more than 40 cents into the low $2.30s, Sumas was stillthe day’s highest-priced market, barely edging out the PG&Ecitygate. Some traders found it hard to believe Sumas had gottenover $3 in some deals on Tuesday. Westcoast had announced theFT-curtailing maintenance on its T-South System about a monthearlier and reminded shippers about it late in November, they said,so nobody had the excuse of not having time to plan around theresulting supply squeeze. Regardless, Westcoast was ending its workWednesday and prices responded appropriately, they added.
“I would like to see us get back to index again in December,” aLouisiana producer said, “but realistically I don’t think it’sgoing to happen,” even with Wednesday’s dime-average gains. But aSouthwest-oriented trader looked at similar price increases and saw”a good chance” of at least some points reaching index levelsagain. She pointed to Waha, where a 10-cent gain into the low$1.90s needed only one repeat performance to hit December’s $2.01index. “But it will have to happen Thursday, though, because theusual weekend slide will take prices down again,” the marketersaid.
Despite the desire of some to finish January business beforeChristmas and take the following week off, several sources don’tsee it happening for most of the trading community. Few if anypeople will be in the office Christmas Eve, they argue, and therewill be too much market uncertainty preceding a long holidayweekend. Because Henry Hub futures won’t close out until theTuesday following Christmas, the great majority of January businessshould get done in that Monday-Thursday period, they said.
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