Slightly cooler temperatures in many major eastern marketregions dropped cooling demand a few notches yesterday, but alleyes quickly turned to the northwestern Caribbean Sea whereTropical Depression 11 appeared poised for a weekend visit to theGulf of Mexico.

The depression triggered a huge 14-cent futures spike to arecord high of $5.195/MMBtu. Spot prices, however, only inched up acouple pennies at most locations. A few points, particularly in theNortheast, even lost some ground mainly in reaction to coolerweather. The Northeast and Midwest in particular are scheduled fora significant cool down with weekend lows in the 40s and low 50s. Afew spots in the upper Midwest are expected to reach the mid-30s.

The California power market was still running hot yesterday withthe ISO again declaring a Stage Two Electrical Power Alert becauseabout 3,964 MW of power was off-line due to mechanical failure orplanned maintenance and because of a fire that apparently wascaused by a sagging tree limb near a power line that makes up theCalifornia-Oregon Intertie. With power reserves below 5%, the ISOsaid it may have to implement interruptible load curtailments. Therestart of the 1,100 MW Diablo Canyon 2 nuclear power plant onPG&E’s utility system in central California along the coastcould provide some relief. Diablo 2 was shutdown Sept. 5 to repaira leak in a steam condenser unit, but was returned to serviceyesterday afternoon. Diablo Canyon Unit 1, also 1,100 MW, isrunning full throttle.

Meanwhile, Tropical Depression 11 could disrupt this marketseverely if it makes a move across the Yucatan Peninsula andstrengthens over the warm open waters of the Gulf. The depressionformed in the northwestern Caribbean east of the Yucatan, but maymove into the Gulf as early as today, according to the NationalHurricane Center. Forecasters said the depression is expected topass over the peninsula, which could slow its development. It hasmaximum sustained winds of near 30 mph, but is expected tostrengthen quickly if it reaches the Gulf.

With working gas levels in storage currently about 292 Bcf lowerthan the six-year average, even a few days without full Gulfproduction could severely hinder the industry’s ability to bringstorage to a safe level prior to the winter heating season. Storagealready is likely to enter the winter heating season with thelowest inventory in a decade, Energy and Environmental Analysis,Inc., an Arlington, VA-based consulting firm, noted in a reportyesterday.

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