Spot gas prices into California broke Daily GPI’s nationwideall-time record high of $39 at the Chicago citygate, set in Feb.2, 1996 trading. A western trader for one marketing firm reported adeal for $41 at the Southern California border Wednesday, saying,”And I’ve got my confirmation from EOL [EnronOnline] to prove it.”California was just part of a hyperpowerful cash market that hadmost points exploring price territory they had never seen before.

Sources were awestuck by the way prices at this point almostseem able to surmount any heights. A dollar-plus screen advance waspart of Wednesday’s strength, they said, but both futures and cashare under the sway of much more severe winter weather approachingthan anyone has seen in years. At the same time, they noted, theyear-on-year storage deficit keeps growing (AGA said 73 Bcf waswithdrawn last week) and is certain to get much larger over thenext two weekly reports.

The price record is likely to be short-lived. “Just wait. Itwon’t take long at all for the new price heights to be surpassed,”said one marketer who based much of her prediction on the fact thatthe January futures contract had broken past $9 in Access tradinglast night.

“You can’t be surprised by anything in this market any more,”according to another trader. “I don’t really like such hugevolatility, but what can you do but accept it and try to makemoney?”

His volatility comment was amplified by the California bordermarket. In addition to the $41 high, quotes there also went as lowas $24, and other California and Pacific Northwest points hadsimilar wide ranges. But believe it or not, they were far fromclaiming the market’s volatility titles Wednesday. No, that went toTransco’s Zone 6 pools in the Northeast, where New York City-areadeliveries ranged from $10.50 to $35 while non-NYC quotes were at$9.50-33.00. One Northeast trader found those peaks hard tobelieve, saying, “They’re not even that cold in the region. It hasto be a matter of psycological perceptions.”

Another Northeast source noted that except for a couple ofdeals, he didn’t even have to quote any cents because the rest wereall in even-dollar amounts. He added, “I think I got scalped buyingthere [Transco Zone 6-NYC] at $30, but may feel like my hair isgrowing back rapidly tomorrow” because Access was already up to$8.85 at that point.

Part of the big western volatility was attributable to latefallbacks. “Some people got hung out late still trying to sell [theCalifornia border] at $40 or so, and they had to be told that pricewasn’t there any more,” a large aggregator commented. “Theyprobably didn’t have much reason for complaint, though, becausethey could still sell around $30-35 or so. The [border] market waseasily moving by a buck per trade this morning.”

The California Independent System Operator had waited until lateafternoon Monday and Tuesday to proceed to a Stage Two ElectricalEmergency, but had issued both Stage One and Stage Two alerts earlyWednesday morning and later indicated a Stage Three was possiblethat evening (see related story). The California Power Exchange hadto fudge its $250/MWh price cap and pay as much as $267 in same-daypeaking prices. Meanwhile, three sources reported hearing PacificNorthwest peaking power prices from $1,200 to as much as $1,600,but those numbers could not be confirmed.

A Texas marketer oberved the Houston Ship Channel, which was atvirtual parity with Henry Hub in December indexes, was nearly 20cents above the Hub Wednesday. That was because any gas at Waha andthe Permian Basis “that can go out west will go out west, leaving arelative supply lack at Katy and Ship Channel.” It’s easy tounderstand when you compare numbers near $40 at the Californiaborder to those around $9 at the Channel, he said. The marketer wasseeing little market impact from the rupture on the pipeline thatused to be known as Channel (see Transportation Notes). “We didhave to cut anything interruptible downstream of the [a fewindustrials east of Houston] but were able to keep all of themwhole with other supplies. It [the rupture] made for a glut of gasin South Texas, so we’re buying less there now.”

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