One marketer was certain it had to be psychological factors thatsent most markets lower by various amounts Tuesday because, as henoted, fundamentals and the screen indicated an upward pathinstead. Few points besides Malin and the PG&E citygate managedgains as the majority ranged from essentially flat to down about adollar in the Northern Natural Gas market area.

“We’re making it through the first really bad cold blast OK, sothe initial panic of the run-up is over,” the marketer said intrying to explain Tuesday’s cash softness that ran contrary tosharply higher futures and frigid weather that is expected todominate the national weather picture outside the Southwest for awhile longer. He added that he understands futures trading volumeis very light, so the screen is not exactly as strong a supporterof cash as it might appear. The marketer also noted that people areoverreaching their credit lines more quickly than usual in basisswap markets, so that’s lessening over-the-counter swap activity,he said.

The Southern California border fell moderately in highlyvolatile pricing that fell steadily from the low $20s to the mid$10s as the morning went on. Its Northern California counterpartsderived some price strength from a Stage Two Electrical Emergencyalert from the Cal-ISO that applied primarily to the northern partof the state. The 500-kilowatt Midway-Vincent Line #3 had to betaken out of service due to arcing at the Vincent Substation,Cal-ISO said. The outage limited electricity flows from Southern toNorthern California to only 650 MW, it said.

It’s wrong to say high gas prices were causing power numbers ashigh as $1,500/MWh in the day-ahead market posted by the CaliforniaPower Exchange, according to one western trader. Generators canmake substantial profit at $500/MWh even with border pricesaveraging nearly $20, he said.

The trader said it was odd to see January border basis careeningaround so wildly Tuesday on EnronOnline. The bid-ask spread wasplus 275-300 most of the morning, he said, then “skyrocketed to[plus] 500-520” at mid-afternoon before settling back to eitherside of 380 later on. It was moving 25 cents at a time, he said,but he was unable to find anyone who admitted doing business at anyof those levels.

Chicago citygates dropped about 30 cents prior to a rumor of aCritical Day alert declaration by regional LDC Nicor proving false.A producer said he was told by a utility staffer that supplies were”tight” and being watched closely, but no OFO was necessary.Chicagoland is expected to see severe weather continuing throughthe middle of next week with temperatures not getting much abovethe teens if at all.

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