Meltdown

The cash market plunged Thursday in response to the latest reports of increased storage (both new and revised) and the screen’s subsequent dive Wednesday afternoon. Weather fundamentals remain generally lightweight and the latest Atlantic tropical storm was fizzling out almost as fast as it had developed.

Every spare molecule of gas, drop of oil and electron is being used up and the world faces a “meltdown” of its economy unless more supplies are found, a leading energy pundit warned a capacity crowd last week at the Offshore Technology Conference in Houston.

Every spare molecule of gas, drop of oil and electron is being used up and the world faces a “meltdown” of its economy unless more supplies are found, a leading energy pundit warned a capacity crowd Monday at the Offshore Technology Conference in Houston.

Is the market in early meltdown stage? At least one traderthought so, saying, “Yep, it sure looks that way” after the screentacked on a second straight day of double-digit losses Wednesdayand was joined by the cash market recording price drops rangingbetween a dime and a little more than 20 cents.

The meltdown occurred as expected Thursday in the cash market.Few points escaped with declines of less than 20 cents, with thegreatest losses of around 40 cents at the linepack-saturatedNorthern California points of Malin and the PG&E citygate,where the utility declared a systemwide OFO for today (seeTransportation Notes).

The meltdown in weekend prices Friday made at least one traderthink of Chernobyl. A few points fell only a little more than 15cents, but a majority of the declines exceeded 20 cents, andOFO-infested California numbers were down about half a dollar atthe border.

The meltdown of the early December aftermarket continued Tuesdayalthough many points made small rallies late in the day from theirbottom levels of the morning. Prices in nearly all production areaswest of Appalachia sank well below $1.50-a level in the “old days”at which many producers used to consider summer shut-ins. ThePG&E citygate was one of the only points still registeringquotes above $2.