The cash market came to a near-standstill at mid-morning Tuesday as a result of the terrorist attacks on New York City’s World Trade Center, the Pentagon and other sites (see related story). Virtually all trading operations sent employees home early, while pipelines and utilities kept only those personnel essential for critical operations on duty.

Prices started out flat from the day before but were already trending higher before the tragic news got around, sources contacted by NGI concurred. Activity at Nymex and at least two major online exchanges, EnronOnline and IntercontinentalExchange, ceased almost immediately, leaving cash traders to grope somewhat in the dark afterwards, a producer said. TradeSpark was headquartered in the World Trade Center and its website was still unreachable as of press time Tuesday. There were reports of attempts at “gouging” as some late offers went sky-high, the producer said. Most Gulf Coast pipes traded in the $2.30s-50s prior to the attack news, he said. “They were offered higher at $2.70-80 late but I don’t think much got done there.”

Calling the morning “extremely erratic,” a marketer said she saw a “ridiculous” Chicago citygate spread of nearly a dollar on one online service before it shut down. The citygate was being bid at $2.56 and offered at $3.50, she said.

Under such circumstances, tremendous confusion reigned about whether nominations would be registered accurately. One source said he thought all pipes into the East probably would declare force majeure and try to keep customers whole as best they could. And a marketer said, “This will certainly create a paperwork nightmare as well as imbalances on the various pipes. If it becomes a prolonged event, then it might necessitate shut-ins.” However, although there were constraints on some nominations systems, a Houston-based market said, “All the EBBs [electronic bulletin boards] are still up, so we think noms are getting entered OK.”

For a big change, the afternoon AGA storage report will not be the most-anticipated event of a Wednesday trading day. Instead, the big question will be whether Nymex and the online platforms will be able to resume operations or will remain shut down for an unknown period of time. Nymex is located about four blocks from where the Trade Center towers used to be. What does seem certain is that Tuesday’s events likely will result in sharply higher energy prices in general for the foreseeable future, even if the source of price strength was totally unexpected. At one point Tuesday Brent crude oil futures topped $31/bbl on London’s International Petroleum Exchange, although they settled nearly two dollars back for the day at just over $29.

Intra-Alberta numbers that soared into the C$3.20s provided an indicator that gas numbers are also due for a substantial rebound. The Aeco run-up made doing any deals at Kingsgate or Stanfield unfeasible, a Calgary trader said.

Although western markets were less directly impacted by the East Coast attacks, reactions were much the same as in the East. Except for moderate retreats at some Rockies and San Juan points and at the PG&E citygate, prices were rising until trading ceased not long after the attacks caused Nymex to shut down, sources said. And nearly all western traders, including those in Calgary, were being sent home by lunchtime.

A Midcontinent marketer said his company just “did whatever we needed to cover our positions and then got out.” He was hoping for business as usual today, but said his firm had made undisclosed “contingency plans” just in case. Another trader at Midcontinent points said, “Pandemonium-related buying sent prices higher immediately after the crash news, but then all the offers got pulled soon afterward.” Everything was moving up until trading ceased around 9:30-45 CDT, he said. “We couldn’t find anyone to make deals after that because so many were going home early.”

A Northeast-oriented marketer said he thought prices would have continued to rise even if the attacks had not turned everything upside-down. Transco Zone 6-NYC got as high as $3.05 before things shut down prematurely, he said. “Most people stopped trading for current burns after the [World Trade Center] crash and started putting gas into storage.”

Tropical Storm Felix formed in the mid-Atlantic but posed no threat to land as it was more than 900 miles east of the northern Leeward Islands. Of more immediate concern to gas interests was a low-pressure system about 150 miles northwest of Key West, FL that had the potential to strengthen into a tropical depression by Tuesday night.

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