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Some West Points Avoid More Overall Drops

The return of industrial load from weekend hiatus did little to stem price losses Monday in most of the cash market. Moderating weather in much of the East and screen weakness extending into its third day Monday dragged a majority of points between a little less than a dime and a half dollar lower.

However, several western points (primarily in the Rockies/Pacific Northwest, Northern California and Western Canada markets) rose by as much as about 30 cents. Overnight lows on either side of 20 degrees were forecast through most of the week in the northern Rockies, with a mass of Canadian polar air slowly spreading the chill southward. And the lapse of a PG&E high-inventory OFO over the weekend (see Transportation Notes) removed a negative influence on western prices.

Midwest citygates dropped despite a cold front keeping temperatures quite low Tuesday from the Great Lakes into the Ohio Valley and snow showers forecast for the region's northerly sections. Chicago was due to go from a high in the mid 60s Monday to one around 50 Tuesday. One reflection of the cold temperatures expected in the Upper Midwest was a flat performance by Northern Natural-Ventura.

The South is starting to see highs in the 70s again, but that primarily means most of last week's heating load has departed with little air conditioning demand from power generators to take its place. And with a Boston high in the mid 60s predicted for Tuesday, that means the Northeast also has lost much of its previous heating load.

Having the currently coldest U.S. weather in the interior West may allow some points in the region to continue upward Tuesday contrary to the general market. But a 41.1-cent dive by December natural futures in their Monday debut as prompt-month contract following November's expiration Friday 34.4 cents lower, combined with forecasts of seasonal temperatures for a good deal of the East, should have most of the cash market falling further Tuesday.

A Lower Midwest marketer certainly had no bullish perceptions, saying he didn't think prices will see a rally anytime soon. "I have no doubt that there is still plenty of downside" room from here for the cash market to explore, he said. However, although local weather was "beautiful" Monday with a high around 70, his city was due to be chilling out at a maximum reading in the mid 40s Tuesday, he said.

Although some traders undoubtedly were tying up loose ends in November business, the marketer said there was no bidweek trading still going on Monday "that I know of."

A West Coast trader agreed that post-weekend bidweek activity was very light, saying "cleaning out dogs and cats" was probably about the extent of November business still being done Monday. It was a quiet day in which both futures and most cash prices "took a good trash-out," he said. Cold weather is largely gone and people appear to be getting ready for storage withdrawal season to commence, he added.

The trader reported doing a few December-March fixed-price term deals Monday at the PG&E citygate in the $7.40-60 range, saying the prices were moving lower along with the screen. Daily PG&E citygates averaged around $7.30 Monday. "Nobody wanted to take a big bite," he said, but the buyers wanted to lock in some more winter supplies at what they considered relatively attractive prices.

A utility buyer in the Southwest said he picked up very little baseload for November because the company's winter-month loads typically are a third to a fourth of what they are in summer. November and March are probably the utility's lightest demand months of the year, he said. "Obviously we'd like to see gas prices get lower," he commented.

Acknowledging some regional nuclear downtime, the buyer said he would prefer to see the nukes at 100% output since fueling them is much cheaper than gas-fired generation, but his company can easily accommodate the outages because of currently low system demand.

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