Is the market in early meltdown stage? At least one traderthought so, saying, “Yep, it sure looks that way” after the screentacked on a second straight day of double-digit losses Wednesdayand was joined by the cash market recording price drops rangingbetween a dime and a little more than 20 cents.

Prices are starting to topple from the effects of being tootop-heavy for most of 2000, an eastern utility buyer said, adding,”but it’s fantastic how fast they’re coming down.” He observed thatless than two weeks ago (Oct. 13) some Northeast citygate quoteswere still topping $6; yesterday the citygates averaged around $5or less. “The weather remains very conducive to continuing bigstorage injections. I know we’re injecting heavily,” he said.

AGA’s report of 71 Bcf injected into storage faked almost everyoneout, as only a few had predicted any more than 60 Bcf. But obviously alot of people just weren’t paying attention, one marketer commented,because as far back as immediately after last week’s report Daily GPIsources were expecting this week’s figure “to return to asignificantly high volume because of the general lack of cold or hottemperatures [last] week” (see Daily GPI, Oct. 19).

It’s hard to find anything that would arrest the cash marketslide, one source said. People are getting much more comfortablewith the storage situation again, especially after Wednesday’sreport, because it looks more and more like the industry may finishinjection season with 2.7 Tcf in the ground. And although weatheranalysts are predicting temperatures typical of a normal winter forNovember and December, they’re saying the January-March period mayseem more like the unusually warm winters of the past three years,he said. On top of that, the National Weather Service is projectingthat temperatures will remain normal to above normal in the easterntwo thirds of the U.S. into the first week of November.

Essentially representing a baseload deal for the last week ofOctober, Transco announced that marketing affiliate Transco EnergyMarketing Co. (TEMCO) was the winning bidder in the pipeline’ssolicitation of System Inventory Management gas for the Oct. 25-31period. The price for 20,000 Dth/d, deliverable at Station 65, was$5.00. Transco Station 65 was trading mostly in the mid $4.60s forswing gas Wednesday.

Many had agreed that the November bidweek would see little to noaction whatever until after the storage report came out, butactivity remained almost nil after the afternoon report. “You’reprobably not going to see any utilities commit to November dealsuntil Friday or even later,” said a Houston-based trader. “And whynot? The longer they wait, the lower the price is likely to be.” Hethought it would pay off better for utilities and end-users to buyspot gas now rather than November supplies.

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