Although the cash market was set to fall significantly Fridayand did not disappoint, many traders were uniform in theirassertion that it could have been worse. A rising futures screen inthe afternoon combined with a bullish National Weather Service six-to 10-day forecast to cause both late jumps in cash prices andanticipation of further increases this week.

Even with the late rebound, however, the price drops were steep,as many points in the Rockies, California and the Northeastplummeted more than 20 cents.

One main reason for the drops out West was the operational floworder (OFOs), which affected both California and Rockies prices.PG&E called a high inventory OFO for its entire system throughthe weekend. Adding that to the mild temperatures in Californiacaused prices at the citygate to plummet more than 30 cents on theday, easily outdoing all other points as the largest decrease. TheSoCal Border also dropped significantly, and one trader said itcould have matched PG&E if it had called a similar OFO. Afterstarting the week near $3.00, the Border finished in the low $2.70range.

Rockies prices also took it on the chin Friday, as multiplepoints dropped more than 20 cents. One trader reported that severalutilities entered the market as sellers because of extremely mildtemperatures in the region. Another Rockies source said her tradingwas affected by Williams Field Services’ maintenance on the KernRiver pipeline (see transportation notes).

At one point on Friday, Chicago was trading as low as the mid$2.60s, one source said. A combination of factors led trading backinto the high $2.70 range later. “The price [in Chicago] got so lowit started getting bought late, sparking the rise in price. Thishurt some traders who were enticed to wait to the last minute andpurchase cheap weekend supplies. The other positive factor wasfield prices, which moved higher and supported prices at the gate.”Chicago’s average for the day was in the low $2.70s, representing aloss of only a few cents.

The screen jump and the weather forecast, which called for theNortheast, Mid-Atlantic and Gulf Coast regions to receivebelow-normal temperatures by late this week definitely put the cashmarket in a different perspective, one Chicago trader said. “All ofa sudden the outlook looks somewhat bullish again. Chicago weatherwas 15 degrees above normal [Friday] and prices held their own. Italked with one Chicago area utility who estimates that a onedegree temperature deviation alters their demand by as much as50,000 MMBtus.”

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