Spot Henry Hub hits four-year low as Gulf Coast gas tanks

Spot Henry Hub hits four-year low as Gulf Coast gas tanks

Houston (Platts)--29Sep2006

Spot gas prices along the Gulf Coast tumbled as much as 70 cents Friday
as several points dipped below the $4/MMBtu-mark on listless weekend demand,
the November NYMEX gas futures contract's Thursday losses and moderate
weather.

Cash Henry Hub gas fell to a low of $3.46/MMBtu, a level not seen since
mid-September 2002, early in its trading session Friday. It opened in the low
to mid-$3.70s/MMBtu, while late trades hovered in the mid-$3.50s/MMBtu. The
point averaged in the mid- to high $3.60s/MMBtu, off more than 50 cents
compared with Thursday.

Higher-than-average volumes also were seen, which traders said was due to
a continued sell-off at the benchmark point.

The weakness at Henry Hub was reflected in all points across the region.
"There was no strength at all anywhere," one Gulf trader said. "There was
nothing with a $4[/MMBtu] handle out there."

"It was ugly," another Gulf trader said. "We saw some forecasts calling
for weather [above 90 degrees Fahrenheit] across the Gulf Coast, so we hoped
that would offset any bloodbath in the market, but that didn't happen."

Transcontinental Gas Pipe Line's zone 3 crumbled more than 55 cents to
average in the low to mid-$3.60s/MMBtu, as the point came out flat to Henry
Hub after a few days of maintaining a single-digit premium.

The Houston Ship Channel fell nearly 60 cents to average in the
mid-$3.40s/MMBtu, a level it last saw in mid-September 2002. Katy averaged a
few pennies above that, shedding 55 cents in the process.

Florida Gas Transmission called an underage alert through Monday via a
company web site posting, announcing that its linepack is currently high and
milder weather is forecast in Florida over the next couple of days.

The alert saw market players shy away from Florida Gas, preferring to see
themselves short than pay any penalties, one Florida trader said.

As a result, Florida Gas zone 3 came off around 70 cents to trade
between $3.75/MMBtu and $3.95/MMBtu, while the Florida city-gates sank a
similar amount to average in the low to mid-$4.00s/MMBtu.

--Samantha Santa Maria, Samantha_santamaria@platts.com

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