Drops

As expected, the cash market was moderately softer for nearly all points Tuesday. The lack of weather-related load in most regions, declines in the major energy futures contracts and the heavy burden of burgeoning storage inventories left prices unable to sustain what one trader had deemed a largely “artificial” rally Monday.

The Rockies market rebounded Tuesday from Monday’s depths, with prices reported back in the $1.60s at Opal and a dime less on CIG, which had been in the $1.20s on Monday. However, few explanations were given. Weather there is still warmer than normal and is expected the stay that way in the short term.

Royal Dutch/Shell Group’s third quarter profit fell for the first time in more than two years, dropping 17% on lower energy prices and lower demand for chemicals. Net income, excluding one-time charges, fell to $2.69 billion from $3.25 billion for the third quarter of 2000. Shell hasn’t had a quarterly decline in profit since the first quarter of 1999 and the company said the outlook remains weak because of the economic slowdown, especially in the United States.

The latest question revolving around Houston and the energy trading community as the week begins is how low can Enron Corp.’s stock go? On Monday, the stock dropped to a low not seen since 1994, failing to boost investor confidence as it lobbied banks for a new credit line. As investors bailed, Moody’s Investor Service cut the energy trader’s long-term debt ratings, and by the time the New York Stock Exchange had closed, Enron had fallen another 10.9%, losing $1.60 to stand at $13.95.

Enron Corp.’s bloodletting continued Wednesday, as the stock price took another hit in extremely heavy volume, with close to 50 million shares trading hands. The stock finally closed at $16.54, down another $3.25, or 16.42%, from the previous day, after rocking back and forth as one of the biggest losers in early trading on the New York Stock Exchange. It reached a depth of $15.51 before climbing again. Pouring salt on the wound, several Wall Street analysts also cut their ratings Wednesday, including Prudential Securities, which advised its clients to sell.

Oklahoma City-based Chesapeake Energy Corp. last week revealed it has sold its Canadian subsidiary, with approximately 175 Bcfe of proved reserves, to an unnamed “large Canadian energy producer,” for $150 million. It expects to record a pre-tax gain of about $35 million in the fourth quarter as a result of the transaction.

Oklahoma City-based Chesapeake Energy Corp. on Tuesday revealed it has sold its Canadian subsidiary, with approximately 175 Bcfe of proved reserves, to an unnamed “large Canadian energy producer,” for $150 million. It expects to record a pre-tax gain of about $35 million in the fourth quarter as a result of the transaction.

The cash market maintained Tuesday the generally somber mood that has prevailed since last week’s terrorist attacks, although sources continued to report small progress here and there towards a return to “normal” trading. Bullish factors were in scant supply, so prices softened at virtually all points except at the PG&E citygate.

The California senate rules committee Friday dropped contempt action against Enron Corp. after reaching agreement with the company on confidentiality protections for commercial documents the lawmakers are demanding. The agreement is identical to one signed with Reliant Energy earlier in the month, according to an Enron spokesperson.