Generally

In light of the potential effects of Hurricanes Katrina and Rita on fuel supplies and tightening supplies of natural gas in the Northeast generally, ISO New England (ISO-NE) “is becoming increasingly concerned about the operational reliability of the New England system during the upcoming winter,” the grid operator disclosed in a recent filing submitted to federal energy regulators [ER03-563-053].

Natural gas customers in the Southeast and the East Coast generally face “a very challenging dynamic,” in the wake of hurricane Katrina. “We have all our eggs in the Gulf Coast basket,” said AGL Resources CEO Paula Rosput Reynolds, who suggested Georgia has another coast with potential.

NGI sources generally were correct Thursday in predicting a moderate cash rally for Friday, but not entirely accurate. Prices fell at virtually all Northeast citygates Friday as a cold front took regional temperatures lower for the weekend, and at scattered points elsewhere. Otherwise quotes ranged from flat to as much as 20 cents higher.

Mixed pricing returned to the market Wednesday. Western points generally ranged from flat to down nearly 30 cents, although Sumas and intra-Alberta managed small gains. The East had a few declines, mostly in South Texas, the Midcontinent and Northeast, amid overall numbers ranging from flat to a little more than a dime higher.

The West rebounded strongly Monday from Friday’s weakness that had been prompted by a weekend OFO and generally mild temperatures. Eastern markets were considerably more laid back after discovering that Tropical Storm Arlene was little more than a minor and short-lived annoyance in the supply picture.

As expected, generally weak weather-related demand, large day-earlier drops in energy futures and the decline of industrial load over a weekend combined to send prices lower by double digits across the board Friday. Some drops were as small as a little over a dime, but they ranged to just above 40 cents.

The cash market found enough cold weather remaining in the Midwest and Northeast and parts of the West to regain its footing and register generally small gains at a majority of points Tuesday. The return of industrial load after a holiday weekend hiatus also helped fuel the mini-rally.

A generally quiet market week came to a close Friday with anticipated softening at virtually all points (a flat Westcoast Station 2 was the exception). The lack of significant heating load in all market areas, the previous day’s bearish storage report and its accompanying screen loss of 22.7 cents, all played a part, with the usual weekend reduction in industrial load in a minor role.

Responding to generally weak weather-related demand, healthy use of storage and the screen’s pre-New Year’s Eve drop of about a quarter, swing prices continued to decline Monday in the still-nascent new year. The common range of declines between about 20 cents and about 65 cents reflected larger drops than occurred last Thursday in most cases.