Spot prices at the Southern California border yesterday lostmomentum and fell back into the atmosphere at around $20/MMBtuafter holding early in the ethereal region above $40. The winterstorm that rocked the state earlier in the week moved eastward andthe initial shock of SoCalGas’ 90% balancing requirement, whichgoes into effect today in response to low storage levels, seemed tobe wearing off a little.

The rest of the market contrasted sharply with what took placeon Nymex yesterday. While March futures lost 50 cents, many cashpoints gained nearly that amount, befuddling observers because ofthe continued mild weather that has been suppressing demand.Apparently following on the prior day’s Nymex’s strength, cashprices rose 20 to 40 cents at most locations.

Temperatures in the entire southeastern quadrant of the countrywere in the 60s and 70s. Many places in Texas, the Gulf Coast andSoutheast had added 10 degrees from the day prior and were morethan 25 degrees above normal. Nevertheless, spot prices in Southand East Texas and in Louisiana were up 40 cents. Midcontinent andMidwest prices added about 30 cents compared to Tuesday’s levels,while the Northeast gained about 40 cents to the low $6.40s.

The Rockies were up quite strongly yesterday compared to thescreen, with Opal quotes coming in the high $5.90s compared to the$5.40s on Tuesday. “The only thing I can attribute it to is colderweather,” said one Rockies producer, noting temperatures in hisregion were 25 degrees colder than on Tuesday. Temperatures in theupper Midwest also lost about 10-15 degrees, he noted.

The latest six- to 10-day forecast from the National WeatherService shows a growing area of below normal temperatures formingacross the northern third of the nation. It also shows a large areaof above normal temperatures in the Southwest with a band of normaltemperatures across the midsection of the nation.

Canada was the exception yesterday as Intra-Alberta pricestumbled despite a continued low storage situation in the provinceand expectations for a new cold front. After opening at C$8.40 perGJ, prices moved up to the C$8.55 level only to tumble as low asC$7.73. As of 4 p.m. (EST), prices had stabilized somewhat to tradeat C$7.80-84.

A Calgary-based marketer had a hard time explaining the priceerosion in a market that has less storage now than it did at theend of the withdrawal cycle last year. According to hiscalculations, Alberta only has about 30 Bcf left in the ground outof a total of 210 Bcf. That compares to about 35-40 Bcf on April 1,2000. To make matters worse, linepack is at just 13.58 Bcf, morethan 500 Mcf less than the target level of 14.2 Bcf. “There are nooperational problems on the system, but the line is drafting and Idon’t expect things to get much better when the cold returns,” hesaid.

However, Alberta and the rest of the market could feel somecontinued downward pressure from the futures tumble yesterday.While domestic cash closed higher, futures posted a sharppost-storage-report reversal. The AGA reported that 95 Bcf of gaswas withdrawn from storage last week, which was in the middle ofthe range of market expectations. The bears on Nymex somehow tookthe ball and ran with it. Storage levels still are 391 Bcf lowerthan the five-year average.

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.