Price

After tapping on the brakes a few times Wednesday, theresurgence in November prices had its foot back on the acceleratorThursday. While not quite pedal-to-the-metal as in Tuesday’s gainsthat often hit 30 cents or more, double-digit increases againdominated the cash market.

The hypervolatility in swing deals done Friday for Nov. 1-2 madeit difficult to gauge where the cash market was moving Monday. Butthe overall mix of flat to about a dime or so up or down (includingjust about all points in between) amounted to a general wash thattilted a little bit to the negative side, sources said. Besides,they added, it was generally a quiet day for most traders as theytook stock of bidweek and prospects for the upcoming days.

Though still one of the most dangerous hurricanes to come downthe pike in many years, Mitch was unable to to sustain its positiveinfluence on cash prices Tuesday. Incremental quotes ranged fromslightly higher to as much as 7-8 cents lower, with the majority ofpoints registering downticks. A diving futures screen set theexample for cash to emulate, sources said.

With storage levels already above 3 Tcf, few observers areexpecting the industry to have any trouble meeting gas demand earlythis winter. But the first quarter of next year, could provide amarket test not seen in the past two winters, several analystswarned last week. In its October Short-Term Energy Outlook, theEnergy Information Administration (EIA) seems to agree.

Raymond James & Associates Equity Research group warnedclients this week a return to normal temperatures this winter couldbring a greater gas market surprise than expected. Winterconsumption spikes over the past two winters have trended downward,but that was because winter 1996/97 was nearly 5% warmer thannormal and last winter was nearly 9% warmer than normal, the firmnoted. Normal weather likely will bring a significant increase inconsumption and with it a significant increase in gas prices thiswinter compared to last.

Once again Tuesday the cash market tended to be stronger to theWest and weaker to the East, although neither region was a model ofconsistency. The West had a couple of flat points, while a few inthe East were flat to slightly higher.

Prices continued to deteriorate Tuesday for much the same reasonas in the previous couple of trading days: weather that’s cool butnot sufficiently cold to generate significant heating demand. Therewasn’t even much cooling load left in Texas after astorm-generating cold front that had knocked out phone service indowntown Tulsa for several hours Monday got as far south asHouston.

East-West price tendencies remained at odds Monday. WhileEastern points ranged from flat to down as much as a nickel, theWest mostly was registering increases. Gains were particularlystrong in the California market, where Malin was up by nearly 15cents after PG&E had ended its weekend high-inventory OFO.

Although the power industry has been rocked by sharp pricerun-ups this summer, average real electricity prices are projectedto drop by more than 25% by 2015 largely due to improvedefficiencies and cost reductions brought about by electricityrestructuring, the Gas Research Institute (GRI) said in a new studyissued yesterday.