As Mark Twain once observed, everybody likes to talk about theweather, and that was especially true in the gas trading communityTuesday. With the official calendar start of winter still more thana month away, it seemed like winter has already begun in almostevery region. The predictable effect was to keep both cash andfutures prices pushing higher, with the screen scaling previouslyunknown heights.

Prices kept going up in eastern markets, but at a slower pacethan on Monday. Tuesday’s increases there tended to be arrayedclosely to either side of 20 cents. The big story, though, was muchhigher prices in the West, particularly dollar-plus jumps inCalifornia and the Pacific Northwest. All three California pointshandily averaged well above $8 for new Golden State price records.Unusually cold weather and a customer-specific PG&E OFO createdheavy California demand, sources said.

In addition, after issuing a slew of power alerts this past summerdue to extreme cooling demand, the California Independent SystemOperator put Stage One and Two Electrical Emergencies into effect lateMonday afternoon (posting them after Daily GPI’s deadline). Anestimated 11,000 MW of generation was unavailable due to scheduledmaintenance, Cal-ISO said (see relatedstory). A similar situation could occur today, an ISO spokeswomansaid.

Although prices hit record highs in Southern California Tuesday,they were by no means the highest Daily GPI has recorded. Thetrading day of Friday, Feb. 2, 1996 is quite memorable as theChicago citygate peaked at $39 and averaged $18.49, making it theall-time champ. On that same day Henry Hub averaged $14.50, theHouston Ship Channel was at $11, and several Gulf Coast pointsalong with Columbia-Appalachia surpassed $10.

“It appears this winter will be guilty as charged of beingnormal to below normal in temperatures,” said a Houston-basedtrader. “The forecasts are coming to fruition. There is a secondfront and possibly a third lined up behind this [current] one, sowe’re talking about sustained cold weather.”

Another source had this perspective: “Anytime you wear a jacketto work in Houston, you assume the gas market will be going up.That’s the way I look at it.”

The intra-Alberta market, which usually siphons strength from anysizeable Nymex jump, was decidedly contrary Tuesday as the only placewhere cash prices fell. Not only was a constraint in place throughThursday at the ABC Border (see Daily GPI, Nov. 14), but a Calgary marketer estimatedthat 300 MMcf/d was backed up into the province as a result of thelatest Alliance Pipeline delay. “They had expected to be moving thatgas to Chicago by now, but obviously they can’t,” the marketersaid. The double-whammy of the constraints prompted NOVA to discouragepacking its system by changing its imbalance tolerance to0/-20%. Alliance is currently moving about 600 MMcf/d of test gas andis still on target for official startup at the end of November, aspokesman said, “but of course we’ve been disappointed a couple oftimes already.”

The disconnect between domestic and Sumas prices on Northwest,which had been spectacular previously at more than a dollar, becamesomewhat incredible Tuesday at more than two dollars. The ABCconstraint, Northwest’s OFO and cold Pacific Northwest weatherpushed the gap further.

Besides cold weather, speculation about today’s AGA storagereport was also a hot topic. One source said most of the peoplewith whom he talked were looking for an injection figure in the30-50 Bcf range, “but I don’t think it will be nearly that much.”

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