Overall, the weekend market behaved predictably after thescreen’s big plunge Thursday, dropping between 15 and 35 cents atmost points Friday. But it was a much different story in Californiaand the Pacific Northwest, where prices rose sharply in hugelyvolatile trading. The Southern California border was “screaming,”said a trader reporting deals ranging from the $8.10s to more than$12.

“Shorter than hell” was one marketer’s colorful description ofthe supply and demand situation at the border of a state besiegedby high power prices and low temperatures Friday. At one point, hesaid, a popular electronic trading site had a bid at $9.50 for aborder volume of 200 MMcf/d and no offsetting offer. “That’s proofpositive that the market was pretty darn short,” he reasoned. Heand another marketer also said a supplier controlling a large chunkof pipeline capacity to the border apparently had oversold at theborder because they were not offering any gas at all Friday.

Other sources cited a relatively new five-day balancing rule bySoCal Gas. You have to be within 50% of your total burn over theMonday-Friday period, one explained; otherwise you pay 150% of adaily index price for any overtakes beyond that limit. California’sgas-fired power plants were under heavy demand stress all week, henoted, “so that was reason enough for any generator to pay whateverwas necessary Friday to avoid the penalty.”

The border shortness also impacted Malin and PG&E citygates,pushing them higher by 40 cents or more. But althoughtransportation constraints continued in the Southwest, prices werefalling there despite the immense border strength. San Juan-Blancodropped more than 20 cents, but Permian quotes saw one of the day’ssmallest declines at 10 cents. The Permian was trading very earlyon either side of $5.50 but later ran above $6, one source said.Transwestern’s West of Thoreau capacity was to stay reduced byabout 140 MMcf/d through Sunday. The constraint is scheduled tofall to about 50 MMcf/d today.

Northwest’s tightening of restrictions on gas that could flownorth through Kemmerer, WY (see Transportation Notes) caused analready huge gap between Sumas and domestic numbers to be inflatedmuch further. Sumas went up about 40 cents while domestic fell morethan a quarter, widening their spread to more than three dollars,(Keep in mind that under “normal” market conditions the twoNorthwest points trade at approximate parity). Kingsgate andStanfield also registered large increases because of the Northwestaction.

The Nymex folks apparently were reconsidering their tremendouslybearish response Thursday to new forecasts of warmer thananticipated weather this week. The screen was down more than 15cents at one point early Friday, a cash trader noted, but thenbegan a climb that carried it eventually to about 30 cents higher.”That’s a big reversal of close to 50 cents,” he said. The 15-dayforecast from one popular commercial weather service came out asmuch colder, prompting Nymex to discount some of the bearishreports that had been circulating Thursday.

A Northeast-oriented marketer was among the ones anticipatingvery cold regional weather this week. That and the big screenrebound are certain to have cash prices rising again startingtoday, he said. In addition, a Dominion (formerly CNG) OFO (seeTransportation Notes) will make Northeast prices run up evenharder, the marketer said, because it will siphon off Leidy storagegas that otherwise might be taken into the Northeast via Transco.

Few if any traders expect much bidweek business, especially ofthe fixed-price variety, to get done until next week. There’s toomuch chance of a significant change in weather forecasts over afour-day holiday weekend to risk adopting a flawed strategy,several agreed. Besides, many expect to be leaving the officeWednesday prior to that afternoon’s latest storage report.

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