Rising

It was getting hot just about everywhere Tuesday except in the Upper Plains. The rising air conditioning load had a moderate price-boosting effect in eastern markets, but virtually none at all in the West.

Expectations of another massive weekly storage injection figure — confirmed by AGA at 117 Bcf for the week ending June 1 — combined with milder weather and high line pack, put significant downward pressure on cash and futures prices yesterday. Most eastern points were down 20-30 cents, while California prices into PG&E at Topock dipped below $3 in response to a high inventory operational flow order. SoCal-Topock prices dropped more than a dollar.

Salomon Smith Barney (SSB) said in a weekly E&P report that it expects gas storage injections to continue to strongly outpace last year and consequently put further downward pressure on gas prices in the near-term. Over the long-term, however, SSB expects current underlying supply/demand dynamics will balance out in a price range of $4 to $5/MMBtu.

Despite prospects for a potentially severe winter storm in theNortheast and moderate screen firmness, the cash market generallyranged from flat to down about 20 cents Friday, as falling weekenddemand made an impact. Northern California numbers retreated fromThursday’s spike, but the Southern California border tacked on morethan $2.50 to its market-leading average.

With water tables rising and court rulings going the state’sway, California began the week Monday on a more upbeat note thanany time this year. A federal court ruling late Friday assuredemergency real-time supplies will be available to the statetransmission grid operator, Cal-ISO, at least through March 19,prompting the governor while on a political trip to Washington,D.C., to issue a reaction praising the federal judge for his “wiseand thoughtful decision.”

Soaring California gas prices and rapidly rising gas demandmainly for power generation the Pacific Northwest and Californiahas prompted an expansion of the PG&E Gas TransmissionNorthwest (GTN) system. The pipeline said last week it plans tofile with FERC in April for a small initial expansion project fornext year but potentially could add 1 Bcf/d of capacity over thenext decade.

With or without deregulation, the impact of rising energy costswill increase the demand for Enron’s growing product base,especially in its services area, offering even more leverage forNorth America’s largest wholesale marketer. Lou Pai, CEO of EnronEnergy Services LLC, provided an overview of his division at theannual investor’s conference last Thursday in Houston, calling theopportunities for growth are tremendous.

End-of-December swing prices rebounded Friday from the week’searlier slide, rising by a dollar or more in many cases but alsofeaturing a few scattered declines. The January aftermarket beganabove first-of-month indexes by varying degrees except atCalifornia/Pacific Northwest points.

Except in the Rockies and Southwest, prices kept rising Tuesdaybut not nearly as spectacularly as on the day before. Californiawas still registering triple-digit increases, but otherwise, mostpoints went up between a nickel and 15 cents. The Pacific Northwestand Northeast citygates saw most of the non-California gainsgreater than 20 cents.