The 2000 cash market was sluggish and weak Tuesday as a fullcomplement of traders finally returned to their offices followingthe New Year’s holiday break. A sharp futures decline coupled withonly moderately cold weather in most regions depressed most pointsby about a dime or more below the levels at which they rang out theold year Thursday.

There was good news on the Y2K front in that everyone contactedby Daily GPI had no nomination glitches themselves and were unawareof anyone else having any trouble. “It went very smoothly on Y2Kfor the gas industry, and that’s a tribute to all the precautionarymeasures that were taken,” said a Houston-based marketer.

The Southwest basins constituted the only area displaying relativeprice strength Tuesday, largely due to a low-linepack OFO by El Pasoand a force majeure limiting flows in Transwestern’s West of Thoreausegment (see Transportation Notes). Theykept San Juan and Permian quotes essentially flat. In addition, amarketer reported losing some supplies to new San Juan Basin wellfreeze-offs; the volumes weren’t very big but were noticeable, hesaid.

The spread between prices in San Juan Basin and the SouthernCalifornia border continued to compress under the influence of mildCalifornia temperatures, a trader noted. In fact, a flat basin andfalling border tightened the spread to the point where it did notcover the approximate 14-cent variable cost of transport, he said.That caused some shippers to effectively abandon theirtransportation by selling gas in the basin and buying it at theborder, the trader said.

Quite a few utilities had traders back in the office Mondayattempting to turn back first-of-the-month gas, but it was anawkward situation for them, according to a Texas trader. With manymarketers and producers being on holiday that day, the market wasvery illiquid for gas returns, he said. For some utilities the onlytrading partners they could find Monday were other utilities, “andthe other utilities didn’t want more gas,” he said.

An East Coast utility buyer said Tuesday he would rather havecolder weather in which to sell storage gas at a profit, “but Iguess I’d better take advantage of buying at lower prices while Ican.”

Virtually all points are trading below January indexes already.But none have lost more value in the early aftermarket thanTransco’s Zone 6-NYC pool. From an index that came in just over $4for January baseload, Zone 6-NYC numbers Tuesday averaged in themid $2.70s. Although one trader said forecasts indicate coldertemperatures entering the Northeast by this weekend, he and a Texasproducer agreed that with storage “being in good shape,” the colderweather is not likely to generate a price rebound this week.

A large marketer said the outlook is also bearish for thenation’s midsection. His company’s weather consultant was not onlycalling for relatively warm weather for the Midcontinent/Midwestthrough next week, but also predicting most of January will haveabove-normal temperatures.

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