Holiday

Californians looking for reason to celebrate over theThanksgiving holiday may have found it in a new report from theCalifornia Energy Commission, which claims that the state shouldhave enough power to meet its electricity demand next summer,barring extraordinarily hot weather.

Citing forecasts of cooler temperatures in the Pacific Northwestfor the holiday weekend, Northwest began allowing both on-systemand off-system balancing Thursday after a long period of barringon-system balancing. However, storage volumes remain high in theJackson Prairie and Clay Basin facilities, limiting operationalflexibility, Northwest said.

Cash traders returned from the long holiday weekend Wednesday tofind most of the market turning considerably softer, and it’s asafe bet that prices will keep falling today, since the entireenergy futures complex was getting clobbered Wednesday, sourcessaid.

Thursday marked the first time bears took firm control of themarket all week, as most price points fell between a nickel and 10cents. A large majority of the deals were made through the weekend,as many trading offices were expected to be sparsely populated onGood Friday.

Even an abbreviated pre-holiday trading session at the New YorkMercantile Exchange gave traders no rest last Friday as the marketclawed its way higher from a “disappointing” open only to reverseright back down at the close. When all the dust had settled and theorders were tabulated, the March contract was off 3.4 cents for theday at $2.633.

Whether it was too much holiday turkey or possibly just a postY2K letdown, the natural gas futures market began the year insomewhat of a funk last week as traders showed an unwillingness topush prices very much on either side of unchanged.

The controversial two-year period in which Dynegy Marketing andTrade held a huge chunk of El Paso’s firm capacity to the SouthernCalifornia border is coming to an end, but if western gas tradersare looking for a new market regime in the new millennium they maybe sorely disappointed. El Paso announced Friday that it has foundanother buyer willing to hold on to 1.2 Bcf/d of firm space to theCalifornia border.

If you don’t like the weather, wait a minute. And that’s exactlywhat the natural gas market will be doing this week followingforecasts calling for the coldest weather of the season togradually move south from Canada over the next couple of days. Buttraders weren’t waiting last Friday as they aggressively coveredshorts and initiated fresh longs in bullish anticipation of thefalling mercury. After gapping up at the open, the January spikedhigher Friday to finish at $2.446, a 16.1-cent advance for the day.

The Energy Information Administration dropped a pre-holidaydowner into U.S. festivities last Wednesday, reporting 1998 U.S.crude oil and natural gas reserve additions chased lower pricesdeep into the minus column.