Cal Border Up to $53, But Most of Market Softer
As one source had predicted, it didn't take long for the spot price record to be broken again (see Daily GPI, Dec. 7). Despite softness at nearly all other points, the Southern California border kept zooming higher Thursday to lift the price bar again to a peak of $53. "Now that's what I call breaking a record!" exclaimed a marketer, noting that it exceeded Wednesday's previous record of $41 by a full $12.
However, few other points managed to keep advancing. Most fell in various amounts ranging from less than a dime to a little more than 50 cents. Malin and the Pacific Northwest, while still averaging lofty levels of more than $27, joined Northeast citygates in measuring their downturns in triple digits.
The morning after breaking through the $9 barrier in Access, futures traders apparently decided some consolidation was in order, a marketer said. The screen drop helped point cash toward lower ground, he said, but it was mostly a moderate letup in this week's cold weather before "the big chill" hits early next week that signaled the spot price drops.
Sources said trading for the weekend in eastern markets shouldn't be too difficult because the "polar pig" won't reach the Midwest until around Tuesday and the Northeast until midweek. A marketer said he already was doing Northeast citygate deals for the weekend Thursday afternoon at that day's lows.
But there could be complications in western markets, which will be feeling the expected tremendous cold earlier. Evidence of that came from a power trader who reported selling at a whopping $3,000/MWh for Monday at the Mid-Columbia electricity market in Washington state. Unconfirmed reports persisted in placing same-day peaking power prices Thursday in the Pacific Northwest at $1,200/MWh or more.
Despite California's power price "cap" of $250, a couple of sources said they knew Cal-ISO was paying at least $400 "out of market" in a desperate attempt to keep as much juice as possible at home instead of seeking greener money pastures to the north. The ISO is issuing its emergency alerts earlier and earlier, starting Thursday with a Stage Two Electrical Emergency in place at 4 a.m. PST. It had not proceeded to Stage Three as of press time.
One marketer doesn't see the phenomenal price strength at the California border going away anytime soon. "Already the border is trading for January at the GPI index plus a premium of $1.08-28" on an electronic trading service, he said. Another trader confirmed that, saying he had done deals at index plus $1.12. He also quoted January border basis exceeding plus 1100, which would have fixed prices approaching $20.
Alliance has joined the Chicago pipeline mix fairly quietly, according to one trader. The trend is to sell Alliance gas mostly to end-users around Chicago, "and typically it's flooding the Peoples [LDC] area," he said. That was causing Peoples citygates to trade about 20 cents below Nicor deliveries in his deals yesterday.
"I would have to think that with this week's weather, we'll see a 150 Bcf-plus storage withdrawal report next week," a marketer predicted.
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