Appeared

The cash market appeared to be entering a holding stage Wednesday as moderate upticks earlier in the week yielded to a mix of flat, slightly higher and slightly lower pricing that tended to be dominated by mild gains. The slowdown in price movement largely was attributed to cool-downs in the Northeast and Midwest market areas, reducing the air conditioning load that had supported the previous advances.

With an 8.2 cent rebound on Friday to $3.218, August natural gas futures appeared to be taking their sweet time dropping below the $3 level, contrary to what many observers had expected. Although it will be extremely difficult for futures to shake the bearish trend with gas storage levels mounting at a record pace and cool weather across the Northeast, the trading activity on Friday looked suspiciously like a potential floor developing above the $3 mark, according to market analysts.

There appeared to be nothing in the way of concrete progress towardresolving the California energy crisis, as much-talked about long termpower contracts have failed to materialize, and negotiations areapparently just beginning on the plan of state politicos to buy outthe power lines of the state’s investor-owned utilities (see DailyGPI, Feb. 20)

Except for continued triple-digit spikes in California, theprice rally that began in trading for the weekend appeared to berunning out of steam quickly Monday. Non-California gains rangedfrom barely above flat to nearly 60 cents at Stanfield; most wereless than 15 cents.

In a move that appeared to appease the country’s ailingindustrial sector, the Mexican government agreed last week to sellnatural gas to domestic industry at a fixed price of $4/MMBtu forthe next three years. Steelmaker Hylsamex, among others, which hadtemporarily shut down facilities and laid off workers because ofhigh natural gas prices, said it would soon restart one of fouriron plants.

Spot prices appeared to be aimed at escaping earth’s orbit Mondayas they skyrocketed by huge amounts, led by several western pointsrecording increases in triple digits. A strong screen had someinfluence, but it was frigid weather saturating most of the NorthAmerican continent and prompting a plethora of pipeline OFOs (see Transportation Notes) that played thebiggest role in a market that awed many participants.

Momentum may have appeared just in time last week forCalifornia’s sluggish power plant siting system with stateapprovals on short- and long-term electricity capacity additionsand the prospects for putting another 2,000-plus MW in play by theend of February

Southern California border prices pushed well beyond $7 Tuesday,while PG&E citygates and Malin appeared to be in a catch-uprace with huge upticks of nearly a dollar at both NorthernCalifornia points. However, the big news that El Paso had gottenfederal approval to resume reduced service on its South Mainline’sLine 1110 did not come until late in the afternoon (see relatedstory in this issue).

After all the winter storm excitement in recent weeks, themarket appeared to be growing calmer Wednesday yet still managed tokeep pushing prices higher. Most of the upticks were between anickel and a little over a dime, with the Northeast remaining thebastion of dollar-plus increases.