Tight

As infrastructure and market functioning problems persistedMonday, the California Independent System Operator (Cal-ISO) calledits 14th Stage One power alert since Nov. 1 and the 46th of theyear, signifying its reserves were expected to dip below 7% whendemand peaked between 5-7 p.m. PST. Initial indications were thatCal-ISO’s price cap lifting late Friday brought additional supplybids but had no impact on easing price increases.

Reflecting the uncertainty of the regulatory process andextremely tight time frames, San Jose, CA-based Calpine Corp.Monday dropped plans for three of five temporary natural gas-firedpeaking power generation plants it had proposed as a stopgapmeasure to meet expected power shortages next summer.

After trading within an extremely tight, 3.5-cent range for mostof yesterday’s session, natural gas futures were lifted by a waveof buying that hit the market literally seconds after the AmericanGas Association released one of its most bullish storage reports sofar this injection season.

After being held to an extremely-tight, 6-cent trading range formuch of the trading session yesterday, natural gas futures cameunder a wave of selling pressure moments upon the release of freshstorage data and reacted by tumbling dramatically into the closingbell. Plumbing a new 5-week low at $3.91, the August contractfinished at $4.031, 22.6 cent lower for the day.

The month of May provided a nice opportunity to become familiarwith the power emergency procedures that are likely to be utilizedduring peak demand periods in New England, New York, and theSouthwest this summer. The North American Electric ReliabilityCouncil’s 2000 Summer Assessment on the reliability of bulk powersupply officially confirmed last week that these three areasprobably will be challenged to meet peaking loads.

The month of May provided a nice opportunity to become familiarwith the power emergency procedures that are likely to be utilizedduring peak demand periods in New England, New York, and theSouthwest this summer. The North American Electric ReliabilityCouncil’s 2000 Summer Assessment on the reliability of bulk powersupply concludes that these three areas probably will be challengedto meet peaking loads.

The industry almost assuredly will see $4/Mcf gas later thisyear, and on a cold day in Chicago next winter it may even see gasprices “momentarily spike” to as much as $30 or $40 due to anever-tightening supply situation, says a University of Houstonprofessor.

The industry almost assuredly will see $4/Mcf gas later thisyear, and on a cold day in Chicago next winter it may even see gasprices “momentarily spike” to as much as $30 or $40 due to anever-tightening supply situation, says a University of Houstonprofessor.

After stabilizing within a tight, 10-cent trading range for thepast week, natural gas futures finally broke to the upsideWednesday amid a post AGA buying surge. May received the largestboost of any month, rallying 7.2 cents to post its first $3.00-plus settlement at $3.021. According to the American GasAssociation 2 Bcf was injected into underground storage facilitieslast week, bringing the total to 1,033, or 31% full. “Its alwaysdifficult to predict the way the market will react to the firstinjection of the season,” a Chicago trader said. “Expectationscalled for net change of plus or minus 10 Bcf and that’s what wegot. If you ask me, I am a little surprised by the market’sreaction,” he said.