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i just cant get too enthused about the short side. why did cash go out trading +5 for a weekend when there was zero power gen demand. the easy answer is that pipes were short and everybody playing catchup from this week. fine. what's it going to trade next week. the gas daily swap implies flat, but it's lagged the actual spread all month. i think cash surprises by trading positive next week with no power gen. this market is not trading like we run out of injection space. so either the market is wrong (maybe but a dangerous assumption to make) or I don't see why sep is so overvalued relative to the rest of the curve. you can certainly argue that the winter and cal 2 are too high, but those certainly don't seem to be going down very fast. march is off 8 cents since jun 29. so if the market wants to say that march is worth 354, then why is sep too high at 298?
-----Original Message----- From: "Lafontaine, Steve" <steve.lafontaine@bankofamerica.com<@ENRON [mailto:IMCEANOTES-+22Lafontaine+2C+20Steve+22+20+3Csteve+2Elafontaine+40bankofamerica+2Ecom+3E+40ENRON@ENRON.com] Sent: Friday, August 10, 2001 6:54 AM To: Arnold, John Subject: RE: HEY JOHNNY timing-i think if we come in monday and normal weather actually shows up they wack this thing -----Original Message----- From: John.Arnold@enron.com [mailto:John.Arnold@enron.com] Sent: Thursday, August 09, 2001 7:48 PM To: LaFontaine, Steve Subject: RE: HEY JOHNNY sorry sorry sorry: things back to normal around here, which unfortunately is boring. tired of my apartment, tired of my girlfriends, a few more weeks like this and I'll be tired of my job. need something to juice up my life. vacation was good. took a few days in belize to get certified for scuba. very cool. then a weeklong finance class at wharton. good to learn something new for a change. very few views of the market here. not sure that all the bearishness is not already built into the market. problem is the bearish sentiment is still tremendously pervasive. everybody, everybody, everybody, is short but wants a rally to 315 to sell more. just not sure what the downside target is. cash isnt behaving like we're gonna run out of injection space in october. if i owned a proprietary storage field and thought we'd approach shut-ins in late oct and be at a much lower level, i either would not inject now or better yet, i'd withdraw now to have room for all that $2 gas later. but hell, the cash market is trading over prompt. not just because it's hot, it's been doing so for about 3 weeks now. thus i could, in fact the storage economics tell me i should, withdraw gas or definitely not inject so i could have flexibility later. something doesnt add up. the spec market is convinced we're going to shut in but the phys market is not telling the same story. so let's assume we're not at shut-ins or have trouble placing gas in october. is the market overpriced? don't think it necessarily is considering the winter will have a risk premium associated with it regardless of the fundamentals after last winter until we get the first weather forecast of the winter. i think we could stay at this price level for a while and then have the next move down late oct early nov when people try to withdraw gas and nobody wants it. i think it was in 99 when the first 3 weeks of nov were injection. can you imagine going into dec with 3.15? but if there is injection capabililty through oct 31, and the winter is going to stay relatively high due to risk premium, how far are the storage spreads going to widen? biggest position right now is short jv and short a ton of u vol. producers are waiting for any move up in cal 2 to give it a spanking. falling back in love with longer term gas though. think 2/3 and 2/4 spreads are golden. thoughts? -----Original Message----- From: "Lafontaine, Steve" <steve.lafontaine@bankofamerica.com<@ENRON Sent: Fri 8/3/2001 2:42 PM To: jarnold@enron.com Cc: Subject: HEY JOHNNY how it goes my man. its all good here. finally getting settled into my personal life-got the family moved ,in the new house etc. john paul was up this past weekend and he came over to my place to sy hi. good guy-has a cool chic.ive been meaning to email you but as always busy as hell. i had dinner with bo collins last nite and a few cocktails-funny to see him changing roles. i enjoy talking to him but hes being quite the diplomat now. seems the new role fits him actually and he seems to be enjoying it.still hard for me to believe hes not gonna miss trading. hows business/life and the vaca? what are your thos ont he mkt? demand has come back a great deal but im not sure its gonna help-maybe too little too late. ive been trading this a little mroe actively now that the mkts been leaning mosrtly one say but fortuntely sold early in the week on the rally before the aga-and after.biggest problem for muchlower prices in the short term is it seems now the whole mkt has the same supply and demand view. but if we can believe that production is up 3% which seems to be the implication we'll have no problm moving about 3.1 tcf(3.2 basis doe).economic growth will be at best flat to last year thru 2001 and i'd say that means the winter will struggle to get much bullishness--ie our biggest concievable draw would be in the order of 2.2 tcf-leaves us around 1 tcf end march, hard to get too excited about that. sprds? not much of clue-i tend to think inverses cont to errode like feb/apr-but maybe not until mkt gives up on winter. prepensity for us to stay contango maybe accelerates.that this year. you think we get to shut in levels? since so much prod growth appears to be from independents does that raise the avg shut in value from say 1.60 to $2.00 or higher?? anyway-be cool,hope all is well. enjoy the weekend. are you going to be in NYC anytime soon? ********************************************************************** This e-mail is the property of Enron Corp. and/or its relevant affiliate and may contain confidential and privileged material for the sole use of the intended recipient (s). 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