Cool Weather Has East Softer While West Rebounds

Despite good support from gas futures, eastern cash prices were dropping by a nickel or so Monday as comfortable fall-like weather prevailed almost everywhere and Hurricane Isaac remained extremely remote from the Gulf of Mexico.

It was a different market story in the West, where snow and cold in the Rockies and a California rally from last week's cratering prices resulted in gains of up to about a dime at most points.

It appears the U.S. has escaped what was shaping up several months ago as a scary summer for power consumers without any serious interruptions (some Californians might want to argue the point, though). Now if mild to cool conditions continue for most markets, it might become a good time for a serious catch-up attempt on the storage refill front, one producer said.

A Northeast utility buyer noted that it's "nice and cool, but not [cool] enough to fire up many furnaces." Temperatures should drop a little more today and stay that way through the rest of the week, he said, "but there's still not much heating load to look for, though."

Although the Southern California border was up on the day, it was falling back in late going, said one power plant buyer. With gas-fired peaking units getting turned off because the state has cooled off so much, he said, "that turned me into a seller instead and I had to accept a low price near deadline."

A Calgary trader thought it odd that intra-Alberta quotes started off only mildly softer but later plunged into the high C$6.10s, because that market is generally faithful about tracking the screen either up or down. Perhaps it was paying more attention to the November crude oil contract, which eventually settled down more than a dollar, the trader suggested. Another reason could have been "nice shorts-wearing weather in Calgary," she added. Sumas was another rare declining point in the West.

Hurricane Isaac was very powerful as it churned about 1,300 miles east of the Leeward Islands late Monday afternoon, the National Weather Service said. But Isaac was also far from any land mass and deemed no threat to anything but shipping.

Other than Southern California border quotes in the low $5.30s to about $5.50 and San Juan reported on either side of $4.30, fixed prices for October were scarce, with indexing and basis trades dominant as usual. Eastern indexes appear headed upward with a large screen jump Monday, a producer said, noting that Columbia-Appalachia "looks very strong." A marketer, however, predicts lower western indexes, with California drops a certainty.

The big story is a tremendous contraction in California border basis, which a couple of traders agreed was plus 19-20 Monday. That compares with an average of about plus 250 for September. At least this week's trading at the border should be much less hectic than a month ago, a marketer commented. The big difference, added a large aggregator, is "how hot it [California weather] was in late August versus how cool it is now."

©Copyright 2000 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.