The cash market showed signs of fatigue Wednesday in strugglingto maintain this week’s upward momentum. Most new gains were in the5-15 cents range, and some western points were beating modestretreats. However, cash may get its second wind today after thescreen reacted quite bullishly to AGA’s first report of net storagewithdrawals this season.

The December futures contract was muddling around on either sideof flat while cash gas traded during the morning. However, it shotup nearly a quarter after AGA said storage inventories had fallenby 6 Bcf last week. The Consuming Region East and Producing Regionactually continued to register small refills, AGA said, but thosewere outweighed by a drawdown of 11 Bcf in the Consuming RegionWest.

Another thing to consider, according to an eastern utilitybuyer, is the fact that this week’s widespread cold snap is certainto result in a much larger withdrawal figure next week in which allthree regions will be involved. “I know we’re currently pullingfrom storage,” he said. A “little bit of warm-up” is due by Friday,the buyer added, but then it will turn colder again for the weekendand stay cold through next week.

Despite a continuing emergency situation in California powergeneration and day-ahead electricity prices hitting $240/MWh,prices fell moderately in California, San Juan Basin and theRockies. The San Juan drop of a little more than a dime was theday’s largest despite transportation constraints on Transwesternand El Paso along with reports of well freeze-ups in the basin.However, El Paso canceled an OFO that had lasted two days andPG&E did not extend a customer-specific OFO.

Volatility was huge in the California market, sources agreed.Both the Southern California border and PG&E citygate startedaround $8.70 but were tanking at the end to the vicinity of $8,they said. A marketer thought the situation was rather ludicrous,saying California utilities and end-users were taking gas out ofstorage when they should still be refilling. (Southern CaliforniaGas had 66 Bcf in storage at the end of October, the most recenttime for which figures were available, a spokeswoman said. TheLDC’s normal working capacity is 115 Bcf.)

The California Independent System Operator had issued Stage Oneand Two Electric Emergency alerts Monday and Tuesday after DailyGPI’s deadline. However, it wasted no time Wednesday in declaring aStage One alert that took effect at 7 a.m. PST. Its announcementcontained a chilling equation for Californians: “Cold Weather + LowImports + Plant Outages = Slim Operating Reserves.” A largegenerator that tripped offline early Wednesday morning,contributing to nearly 12,000 MW of planned and unplanned plantoutages, prompted the swift emergency alert, Cal-ISO said. Inaddition, the amount of power normally expected to be imported fromthe Pacific Northwest was cut by a third because it was needed inWashington and Oregon, “states also suffering from cold fallweather,” it said.

Prices went in two directions on Northwest – up at Sumas anddown for domestic gas. That widened the spread between the twopoints to about $2.40, and it was chiefly due to Northwest issuinga “must-flow OFO” requiring many shippers to send a tenth of theircontract demand south through the Kemmerer (WY) Station constraintpoint (see Transportation Notes), a marketer said.

A Midwestern trader said forward December-March basis forMichigan citygates weakened to plus 24.5 Wednesday, down from plus26 on Tuesday.

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