Price Drops Outpace Increases in Mixed Market

There was almost no consistency in price movements Wednesday, although a slight majority of the changes were downward. Rises and falls mixed with each other in the Gulf Coast and Midcontinent/Midwest.

However, the trends in the Northeast and California were all down, while most of the Rockies/San Juan points except Sumas and Kingsgate saw fairly substantial increases. Once again Transco Zone 6 (NYC) led the downturns with a drop of a little more than six dollars.

Cash traders got little guidance from futures numbers that ranged to either side of flat during morning activity, but they continued to sit up and take notice of the first major breaks from severely cold weather in several weeks for key market areas. Some forecasters have started saying the jet stream, which had been pushing arctic air into the Deep South previously, has shifted northward and eastward again, said a Houston-based source. That's a sign that more moderate weather is likely to be sustained for a while, he added.

"There's plenty of gas out there. It's just a case of how much you're willing to pay for it," said an eastern buyer. "And at least for now, we're not having to pay as much as in the last couple of weeks."

Even though it was a holiday week, natural gas storage withdrawals last week topped the 200 Bcf mark --- a first for December --- but it didn't impress the market. AGA said 209 Bcf was taken out of storage last week, led by a whopping 142 Bcf in the Consuming Region East alone. And a sampling of other traders indicated that the biggest-ever December drawdown was essentially neutral in their estimation. The screen, which had drifted from moderately stronger in the morning to moderately softer in the early afternoon, spiked just as the report came out, but if you blinked you may have missed it. Almost immediately afterward the uptick was reversed, with the February contract eventually settling down almost 18 cents on the day.

The frigid weather of the last week of 2000 apparently was harsher than people thought, a marketer said, since even industrial suspensions of operations between Christmas and New Year's and other demand reductions associated with a holiday period failed to avert a huge withdrawal that left total U.S. working gas at only 53% full with a lot of winter left to go.

Gas traders were keeping an eye on the California situation, where the state Public Utilities Commission is expected today to approve Wednesday's proposal to grant Southern California Edison and Pacific Gas & Electric an emergency 90-day electric rate hike of 1 cent/KWh. However, their consensus was that the CPUC action was a "joke," with one terming it "way too little, way too late." No one expected it to avert bankruptcy filings by the two utilities or rolling blackouts later this year.

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