Despite a substantial amount of near-winter weather lingering in the Midwest and Northeast market areas, softer cash prices Wednesday showed conclusively that the early-week rally had run out of steam. A few scattered points were flat to barely lower, but otherwise losses ranged up to about 30 cents at the PG&E citygate. Most decreases were around a dime or less, however.

As expected, Tuesday’s downturn in the energy futures complex played its part in Wednesday’s lower prices, sources said. The heating load generated by cold temperatures in the North was insufficient to overcome that negative influence, one added, and he suspected that use of storage helped quell demand for new production.

Several traders described Wednesday’s market activity as among the quietest they had experienced so far in October.

A Northeast utility buyer commented, “It’s cold and wet and windy,” making the weather kind of like a “mini-Nor’easter” Wednesday. It will remain chilly in the region for another day or two, but the worst of the nasty conditions was expected to be departing Thursday. A marketer reporting the same price ranges for the New York City and non-NYC segments of Transco’s Zone 6 pool said that when they’re that close to parity, “it means there was almost no load in New York City.”

A couple of Florida buyers agreed that weather loads in the state are down so much that Florida Gas Transmission’s long-running Overage Alert Day notice had been rendered essentially meaningless.

PG&E citygate quotes got hammered by the utility’s issuing a high-linepack OFO (see Transportation Notes), but all California points saw some of the day’s biggest price drops as mild weather reduced demand throughout the Golden State.

A marketer noted that recently high-flying Sumas prices recorded a significant loss of 15 cents, adding, “Yeah, Northwest is still complaining about low linepack at its north end. I guess Sumas just fell along with the overall market.”

A Canadian producer said prices tried a little rally early Wednesday morning when U.S. President Bush signed the Iraq war resolution passed by Congress last week, but then retreated. Intra-Alberta numbers fell about C15 cents into the mid C$5.20s as moderate weather again prevailed in the province. However, next-month prices were above swing and tending to rise, the producer said, quoting November sales going from C$5.35 in the morning to C$5.47 in the afternoon.

Tropical Depression Fourteen had pretty much faded out of the market picture entirely. Without ever reaching named tropical storm status, the depression was starting to merge with a cold front over central Cuba Wednesday afternoon and losing tropical characteristics, according to the National Weather Service. It was expected to continue moving to the northeast. The governments of Cuba and the Bahamas discontinued all storm warnings for their countries.

Although it wasn’t a total surprise to anyone, the announcement that Dynegy is getting out of the wholesale energy trading business (see related story) still wasn’t good news for the trading community. Market liquidity was already in a squeeze, and Dynegy’s exit will just make it even tighter, one source said.

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