The November aftermarket failed to surprise anyone by startingout Tuesday generally well below monthly indexes andlast-of-October prices. Only the Southern California border andMalin managed to stay close to bidweek levels.
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Despite the fact that bids were considered well below whatgovernment officials hoped, Alberta soon expects to be the firstCanadian province to successfully deregulate its power industryafter five companies won the rights to sell electric power in thecoming retail marketplace, which opens Jan. 1, 2001.
Futures succumbed to another major technical correctionyesterday as the July contract gapped 2.5 cents lower at the openand dropped a dime early on before plummeting after the AGA gasstorage report came out at 2 p.m. At the end of the regular tradingsession, July was down 34.9 cents, August had dropped 35.1 centsand September was off 33.1 cents. The July contract had a 39-centrange for the day, trading as high as $4.335 and as low as $3.930.
Although gas futures prices could take a short-term dip,possibly below $2.65, followed by a small rebound, by late May,Susannah Hardesty, president of Energy Research and Trading,expects prices to be solidly above $3, maybe as high as $3.30. Andshe’s not alone. Given the significant hype about the increase ingas-fired generation and the surge in peak summer power needs,Cynthia Kase of Kase and Company said this market could soar tounexpected heights.
Texas Eastern (Tetco) said Friday its delivery pressures haddropped below contractual levels due to cold weather and highmarket-area takes. Thus it issued an OFO, effective at 1 p.m. CTthat afternoon, requiring that all deliveries in its M-3 zone underall rate schedules be made at a uniform hourly rate. All M-3Operational Balancing Agreements were suspended for purposes ofhourly allocations only during the OFO period, the pipeline said.Penalties for non-compliance with the OFO were $25/dth. However,late Friday afternoon Tetco said the OFO was being suspended at 9a.m. Saturday because of forecasts of a “slight” warming trend.
After trading within an extremely tight, 3-cent range for almostthe entire trading session Thursday, the January contract was hitwith a late sell-off, as bears took advantage of nearly-illiquid,pre-holiday trading conditions. No fresh news was seen to incitethe liquidation, leaving several traders to suggest it was anattempt to set a bearish tone for the January contract expirationTuesday. The prompt month finished down 4.5 cents at $2.399 amidlight estimated volume of 28,617.
While the rest of the nascent December aftermarket Tuesdayreflected a mix of prices both above and below indexes but mostlyon the slightly higher side, Northeast citygates reacted todeliverability limits and increasingly winter-like weather byshooting up to $3-plus in most cases. The spike was most evident atTransco Zone 6-New York City, which saw a tremendous range of about$1.63 from top to bottom led by a high quote of $4.75.
Following last Friday’s near price-stalemate, bears were quickout of the blocks yesterday, and within the first hour of tradingthe June contract reached it’s lowest level since April 19. Themarket received a slight buying boost before the noon hour, butsellers were at it again yesterday afternoon, carving out a $2.145low in choppy trading activity. The June contract finished at$2.176, down 4.9 cents for the session.
After opening just below Tuesday’s close, the May futurescontract chopped lazily sideways yesterday before eking out a smallgain before the close. In fact, yesterday’s price action was sosubdued it was hard for some traders to believe it was expirationday at the New York Mercantile Exchange. The May contract completedits tenure as prompt month, expiring at $2.348, up 1.7 cents forthe day.