Non-performance of Enron-related gas did not appear to be a major factor in Monday’s price rebounds that were especially strong in the West. Replacement of purchases from Enron did play a part, sources said, but it was more a big Tuesday-only production outage in the Rockies and covering of short positions that sent post-weekend prices soaring by about 20 cents or more across the board. Opal quotes saw the biggest gain by far of more than 80 cents, according to one source.

Actually Monday’s gains were somewhat psychologically inflated, a large producer said, because mostly gas traded where it went out Friday at the high end of that day’s ranges. “Price averages were artificially low on Friday” because a big run-up then had started at the market’s bottom end, he said.

Several traders agreed that the market had at least partially insulated itself from potential problems with Enron supplies beforehand. “People could see it [Enron collapse] coming last week and took steps to reduce any hassles much as possible,” a Gulf Coast producer said. Before Wednesday morning, when the EnronOnline shutdown and Dynegy’s pulling out of a proposed merger signaled that trading with Enron would be risky, a great majority of December business had been indexed and/or basis-related, he went on, so most fixed-price bidweek deals didn’t get done until afterward. The producer thinks Enron’s travails will have much more effect on “the liquidity of exotic financial derivatives” than on physical gas in the aftermarket.

A marketer pinned much of the price firmness Monday on a tie-in maintenance outage of the Jonah Field behind the Opal (WY) Hub that will take about 360 MMcf/d off the market today (see Transportation Notes). It’s obvious that a Rockies shortfall would have direct impact on the San Juan Basin, California and Pacific Northwest markets, he said, “but when Rockies gas is not going to the Midcontinent/Midwest, the supply effect tends to be felt in the rest of U.S. markets.” That doesn’t work in reverse, he added; that is, a shortage in the Gulf Coast or Northeast would mean little to Rockies prices.

An aggregator reported stranding much of his Kern River capacity to California because his Opal and border-SoCalGas deals were only 14 cents apart, which he said didn’t cover the cost of transportation.

Several traders acknowledged that there was some retrading going on related to bidweek deals with Enron. However, actual non-performance by Enron seemed to be relatively minor, they said. After all, as one pointed out, for everybody replacing a purchase from Enron, there likely had to be somebody with an offsetting sale to Enron available to offer make-up gas. “I personally don’t attribute any of [Monday’s] strength to Enron. I thought we might see Enron-related ‘daisy chain’ deals breaking down, but there hasn’t been that much.”

A Texas-based producer was seeing “a little bit on both sides of the [Enron] situation.” He had calls from some other producers seeking to unload gas that Enron was supposed to take from them, and also from buyers needing make-up gas, “but not a whole lot in either case.” It sounds like those would tend to cancel each other out anyway, he said, but there might have been some effect from the supply side to Enron “pulling away first late last week, and now buyers are following up with more demand today since Enron didn’t have the gas to give them.”

A “fair amount” of end-user customers in the Pacific Northwest were not getting gas Monday that they had purchased from Enron, a marketer said, but there was relatively little impact because “we had already covered the situation with back-up supply provisions.”

An eastern utility buyer did not perceive Enron-related trading as very significant to Monday’s market, so he found it hard to understand why prices were up so sharply in the face of mild weather and plentiful availability of storage. “The only thing I can see is that many buyers must have come into the month not just short, but VERY short,” he said.

Don’t expect the bullishness of yesterday to last, cautioned a Midcontinent marketer, because the market “is going to get ugly quickly.” He noted a screen downturn, but what really mattered to him was having gas returned from a lot of buyers in Texas. “One LDC there hadn’t given gas back to us in 10 years, but today it returned every molecule we had sold it,” the marketer said. Their load was barely enough to cover their storage withdrawals, he said.

EnronOnline was up again Monday, but other than Nymex swaps it was not featuring much in the way of gas products, one source said. EOL electronic rivals were taking up some of the slack, but there was a lot more old-fashioned over-the-phone business being transacted than usual, he said. He observed that it may have been a novel experience for some of today’s youngest traders, who may have leaned on EOL and other on-line platforms over the past year or two.

The weather outlook remains bearish for prices. Revised forecasts for the Midwest indicated colder temperatures starting Saturday, a marketer said, but that just means “normal,” he said.

©Copyright 2001 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.