Message-ID: <24979504.1075842491157.JavaMail.evans@thyme> Date: Fri, 27 Oct 2000 07:46:00 -0700 (PDT) From: lorna.brennan@enron.com To: julie.mccoy@enron.com, steve.klimesh@enron.com, gary.sova@enron.com, rob.wilson@enron.com, lon.stanton@enron.com, david.marye@enron.com, courtney.barker@enron.com, sarabeth.smith@enron.com, roger.westfall@enron.com, steve.thomas@enron.com, doug.aschwege@enron.com, judy.beck@enron.com, ken.anderson@enron.com, bryan.reinecke@enron.com, robert.johnson@enron.com, carolyn.descoteaux@enron.com, becki.souci@enron.com, gary.choquette@enron.com, ld.stephens@enron.com, rockey.storie@enron.com, kent.miller@enron.com, john.dushinske@enron.com, dave.neubauer@enron.com, bill.fowler@enron.com, michael.bodnar@enron.com, joni.bollinger@enron.com, david.badura@enron.com, janet.bowers@enron.com, craig.buehler@enron.com, bob.burleson@enron.com, allen.cohrs@enron.com, john.fiscus@enron.com, steve.gilbert@enron.com, morgan.gottsponer@enron.com, stephen.herber@enron.com, dana.jones@enron.com, stephanie.korbelik@enron.com, bill.mangels@enron.com, penny.mccarran@enron.com, vernon.mercaldo@enron.com, larry.pavlou@enron.com, eileen.peebles@enron.com, tony.perry@enron.com, loren.penkava@enron.com, ken.powers@enron.com, chris.sebesta@enron.com, frank.semin@enron.com, neal.shaw@enron.com, larry.swett@enron.com, kay.threet@enron.com, mike.ullom@enron.com, lisa.valley@enron.com, chuck.wilkinson@enron.com, jim.wiltfong@enron.com, jo.williams@enron.com, karen.lagerstrom@enron.com, bob.stevens@enron.com, sue.neville@enron.com, mike.barry@enron.com, martha.janousek@enron.com, kimberly.watson@enron.com, don.powell@enron.com, steve.weller@enron.com, michael.stage@enron.com, tim.johanson@enron.com, laura.lantefield@enron.com, frank.oldenhuis@enron.com, jeff.nielsen@enron.com, tracy.schwartzkopf@enron.com, robert.mason@enron.com, sean.bolks@enron.com, miriam.martinez@enron.com, lee.ferrell@enron.com, john.williams@enron.com, reyna.cabrera@enron.com, theresa.branney@enron.com, lynn.blair@enron.com, rick.dietz@enron.com, steven.january@enron.com, sheila.nacey@enron.com, donna.scott@enron.com, mary.miller@enron.com, michel.nelson@enron.com, mike.mcgowan@enron.com, julia.white@enron.com, drew.fossum@enron.com, glen.hass@enron.com, mary.darveaux@enron.com, rita.bianchi@enron.com, ranelle.paladino@enron.com, patrick.brennan@enron.com, tim.kissner@enron.com, steven.harris@enron.com, jeffery.fawcett@enron.com, lorraine.lindberg@enron.com, kevin.hyatt@enron.com, christine.stokes@enron.com, tk.lohman@enron.com, michelle.lokay@enron.com, lindy.donoho@enron.com Subject: Temporary Slack - CERA Alert Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Lorna Brennan X-To: Julie McCoy, Steve Klimesh, Gary Sova, Rob Wilson, Lon Stanton, David Marye, Courtney Barker, Sarabeth Smith, Roger Westfall, Steve Thomas, Doug Aschwege, Judy Beck, Ken Anderson, Bryan Reinecke, Robert L Johnson, Carolyn DesCoteaux, Becki Sans Souci, Gary Choquette, LD Stephens, Rockey Storie, Kent Miller, John Dushinske, Dave Neubauer, Bill Fowler, Michael Bodnar, Joni Bollinger, David Badura, Janet Bowers, Craig Buehler, Bob Burleson, Allen Cohrs, John Fiscus, Steve Gilbert, Morgan Gottsponer, Stephen Herber, Dana Jones, Stephanie Korbelik, Bill Mangels, Penny McCarran, Vernon Mercaldo, Larry Pavlou, Eileen Peebles, Tony Perry, Loren Penkava, Ken Powers, Chris Sebesta, Frank Semin, Neal Shaw, Larry Swett, Kay Threet, Mike Ullom, Lisa Valley, Chuck Wilkinson, Jim Wiltfong, Jo Williams, Karen Lagerstrom, Bob Stevens, Sue M Neville, Mike Barry, Martha Janousek, Kimberly Watson, Don Powell, Steve Weller, Michael G Stage, Tim Johanson, Laura Lantefield, Frank Oldenhuis, Jeff Nielsen, Tracy Schwartzkopf, Robert Mason, Sean Bolks, Miriam Martinez, Lee Ferrell, John Williams, Reyna Cabrera, Theresa Branney, Lynn Blair, Rick Dietz, Steven January, Sheila Nacey, Donna Scott, Mary Kay Miller, Michel Nelson, Mike McGowan, Julia White, Drew Fossum, Glen Hass, Mary Darveaux, Rita Bianchi, Ranelle Paladino, Patrick Brennan, Tim Kissner, Steven Harris, Jeffery Fawcett, Lorraine Lindberg, Kevin Hyatt, Christine Stokes, TK Lohman, Michelle Lokay, Lindy Donoho X-cc: X-bcc: X-Folder: \Drew_Fossum_Dec2000_June2001_1\Notes Folders\Notes inbox X-Origin: FOSSUM-D X-FileName: dfossum.nsf Here is CERA's latest near term analysis. ---------------------- Forwarded by Lorna Brennan/ET&S/Enron on 10/27/2000= =20 02:40 PM --------------------------- webmaster@cera.com on 10/26/2000 06:05:45 PM To: Lorna.Brennan@enron.com cc: =20 Subject: Temporary Slack - CERA Alert ********************************************************************** CERA Alert: Sent Thu, October 26, 2000 ********************************************************************** Title: Temporary Slack Author: N. American Gas Team E-Mail Category: Alert Product Line: North American Gas , URL: http://www.cera.com/cfm/track/eprofile.cfm?u=3D5526&m=3D1402 , Alternative URL:=20 http://www.cera.com/client/nag/alt/102600_15/nag_alt_102600_15_ab.html ********************************************************* Warm weather and strong storage injections have temporarily shifted the foc= us=20 in the gas market away from a potential supply shortage this winter toward a growi= ng=20 sense that supplies might just prove adequate. The result has been a steady and= =20 steep decline in the November NYMEX price from $5.63 per MMBtu on October 12 into the $4.60s as of October 25. Cash prices have followed suit, falling from t= he=20 mid- $5.50s to the $4.60s at the Henry Hub, and gas is now pricing below residua= l=20 fuel oil in the Gulf Coast and especially on the East Coast. Although gas storage=20 inventories will begin the winter at levels higher than expected, in CERA=01,s view ade= quate supply for the winter is not yet assured, and the market remains subject to= a=20 quick return to prices well above $5.00 with the first cold snap. Storage injections of 71 billion cubic feet (Bcf) for the week ended Octobe= r=20 20 accompanied by broad-based and continuing warm weather have driven the shif= t=20 in market psychology. Last week=01,s injection rate was 26.5 Bcf, or approxima= tely=20 3.8 Bcf per day, above the previous five-year average for those seven days and = 58=20 Bcf above the 13 Bcf of injections recorded last year for the week ending Octob= er=20 22. With warm weather this week and the return of more normal temperatures=20 expected next week, CERA now expects storage to reach a maximum level of 2,784 Bcf o= n October 31--still an all-time low entering the winter, by 26 Bcf (see Table= =20 1). Is this inventory level "enough"? Not yet. Storage inventories this winter= =20 under 15- year normal weather conditions would fall to approximately 780 Bcf, 22 Bcf= =20 above the previous all-time low. This end-of-March minimum implies total=20 withdrawals in the United States this winter of 2.0 trillion cubic feet (Tcf), 128 Bcf abo= ve=20 last year=01,s withdrawals. But holding withdrawals this winter down to 2.0 Tcf in the fac= e=20 of a return to normal weather--and the demand rebound of 3.0 Bcf per day it woul= d bring--will be difficult. Although the beginning of a US supply rebound and growing imports will add approximately 1.0 Bcf per day to supplies this=20 winter, holding withdrawals down requires both of the following: * Industrial markets--mainly ammonia and methanol producers--that are now shut down because of high gas prices must remain shut down. These markets represent approximately 0.5 Bcf per day of demand that could return, should gas prices moderate relative to ammonia and methanol. * The nearly 1.5 Bcf per day of switchable load now burning residual fuel oil must remain off of gas. In CERA=01,s view, for gas prices to fall below resid on a sustained basis,= =20 particularly as power loads increase this winter, it must become apparent that winter=20 demand can be met, the current resid load can return to gas, and storage inventories c= an=20 be held reasonably near the previous record low. That low, 758 Bcf, occurred in Mar= ch=20 1996 and was accompanied by a February average price of $4.41 and a March averag= e=20 of $3.00 at the Henry Hub. That spring, however, US productive capability was= =20 nearly 4.0 Bcf per day greater than it is today, winter power generation demand wa= s=20 lower, and there were about 4.5 million fewer residential and commercial gas=20 customers in the United States. Market fundamentals in CERA=01,s view still support gas prices above those = of=20 resid, which as of this writing is pricing in the $4.75-$5.00 per MMBtu range. War= m weather throughout November and into December could reverse this=20 relationship, but a warm October alone is insufficient, and any cold weather within the next = few weeks will quickly tighten the slack that has temporarily come into the=20 market. CERA=01,s price outlook for November--an average of $5.50 at the Henry Hub-= - stands for now. **end** Follow URL for PDF version of this Alert with associated table. ********************************************************* CERA's Autumn 2000 Roundtable event dates and agendas are now available at= =20 http://www.cera.com/event ********************************************************* ********************************************************************** Account Changes To edit your personal account information, including your e-mail address, etc. go to: http://eprofile.cera.com/cfm/edit/account.cfm This electronic message and attachments, if any, contain information from Cambridge Energy Research Associates, Inc. (CERA) which is confidential and may be privileged. Unauthorized disclosure, copying, distribution or use of the contents of this message or any attachments, in whole or in part, is strictly prohibited. Terms of Use: http://www.cera.com/tos.html Questions/Comments: webmaster@cera.com Copyright 2000. Cambridge Energy Research Associates =20