The cash market hemmed and hawed again Tuesday morning, leavingprices virtually where they were last Friday. However, the futuresmarket would not go quietly. After a fairly unremarkable session tostart the week, the bulls once again had their way, pushing the Maycontract up more than 13 cents for the day(please see futures story). Cash prices were mostlyimmune to the strength.
But the futures spike certainly portends a stronger day for cashtoday. One Texas producer, however, is hesitant to get too carriedaway. He pegged his Katy sale at $2.47 basically flat from Monday’sprice level, noting they have had steady cooling demand for thelast week in a Katy market that is a bit short from the first ofmonth. He expects prices to open on a stronger note tomorrow insympathy with futures but not to keep pace one for one.”Fundamentals just do not warrant it right now.”
A Chicago marketer agrees cash will be hard pressed to mimicfutures. He saw Chicago prices cut a wide swath through the 2.50sand even climb into the $2.60s in a late deal. “I’d look forChicago to continue higher to trade even with May futures onWednesday. But even if cash trades up to meet the screen, there isstill strong economic incentive to put gas into the ground becausephysical basis is at six and three-quarters right now for May.
A Western trader said the basis is widening Malin-PG&ECitygate. That basis has been steady in the low 30s (cents) but hasstretched to about 40 cents for gas to flow this weekend. Heattributes this to people oversubscribing to available transportfrom Malin to the Citygate via Redwood path. As a result, there isexcess gas at Malin, and strong buying at the citygate by peoplestuck without transportation. “Moving gas down using as availabletransport was really paying off in March. However, too many peoplefigured it out and as a result are being forced to pay up inApril.”
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