The market went into a holding pattern for the most partThursday with a mix of moderate increases and decreases that wasweighted slightly to the downside. A big screen runup after mostcash business was completed had several traders expecting that cashwould take that development as a cue to avoid weekend softnesstoday.

Once again California stood apart from the general market as thePG&E citygate recorded the day’s largest drop when the utilityfailed to extend a low-linepack OFO. And the Southern Californiaborder was the biggest gainer as many traders continued to expectSoCal Gas to switch to 90% daily balancing soon. One marketer saidthe border’s wide range reflected heavy discounts being applied toEhrenberg, Needles and Kern River Station prices. While Topock gaswas being offered at $15.50 on EnronOnline, KRS was trading atabout $14.75, he said.

But the really curious thing about yesterday’s session was therelative strength in the border market amid crumbling power prices,the marketer continued. Day-ahead Mid-C prices fell from $400/MWhto $240/MWh, and usually when you get that type of move in poweryou see a spillover in gas prices, he continued.

Although a couple of sources professed to be mystified aboutwhat was behind the big screen surge, a Gulf Coast marketerattributed it to what he called an AVN (aviation) weather modelthat was reported about mid-morning. The model calls for a hugemove of Siberian air into Western Canada starting next week, andover the succeeding seven to nine days the cold front is expectedto move into the Midcontinent/Midwest and eventually the Northeast.But the forecaster reporting the model said there is room forvariation in it and he should know by today whether the Siberianfront development is verifiable or should be repudiated.

Chicago citygates ranged to either side of $6.00 in a tradingsession that to one participant “was so orderly it was almostaggravating.” Chicago pretty much stayed at a static 18-centpremium to Henry Hub, she said. “We need some of the weather fromNovember and December to creep back into the Upper Midwest. Thatwill get things going at Chicago again.”

Western traders are beginning to discuss the possibleconfiscation of their gas by nearly bankrupt PG&E. One went sofar as to say he had “heard it straight from the horse’s mouth”(that is, the affected shipper) that the troubled utility hadalready begun confiscations last week. Another said PG&E has inits tariff the right to confiscate someone’s gas if they fall shortof supplying 100% of the delivery volume nominated. PG&E paysfor it at some rate the trader was unfamiliar with, but if theshipper wants to keep its customer whole, it must go back out andbuy more gas at market prices, he said. That’s a good argument forchecking your renoms carefully each day, he went on, and maybe evenbuilding in a cushion by nominating receipts at 102-103% of thedelivered volume.

However, other sources tended to discount any immediateconfiscatory threat. Currently, PG&E’s core residential andsmall commercial customers are pulling about 1.4-1.6 Bcf/d, whichis well below system inventory currently in the 3.0-3.1 Bcf/d area,a marketer said. “I would say that system inventory would have tobe cut nearly in half before confiscation will take place.”

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