NEW YORK -- Natural-gas prices hit an all-time high Tuesday as cold weather forecasts for much of the U.S. and a supply crunch in California sparked anxiety over tight winter inventories.

At the New York Mercantile Exchange, December natural gas climbed 15.9 cents, or 2.5%, to settle at $6.408 per million British thermal units, below an all-time high of $6.51 set moments after the opening bell. The previous record of $6.395 was set Monday.

Other energy futures settled mixed amid profit-taking. January crude oil dipped six cents to $35.16 a barrel, but February crude gained three cents to $34.19 a barrel.

December heating oil lost 0.21 cent to $1.0941 a gallon, after rallying almost two cents Monday. December gasoline shed 0.31 cent to 91.66 cents a gallon.

Natural gas received a boost from skyrocketing demand in California, where prices in the cash market reached as high as $18 per million British thermal units for Wednesday delivery.

Tim Evans, an analyst at IFR Pegasus, noted that natural-gas prices in southern California have soared because of a regional supply crunch.

Diablo Canyon 1, a nuclear plant in Avila Beach owned by PG&E Corp.'s Pacific Gas & Electric, shut down Monday, because of faulty testing equipment. The plant, which produces 1,073 megawatts of power a day, had reopened only Friday after being down since early October for refueling. It reportedly had reached about 50% of its generation capacity before being taken off line Monday. A megawatt is enough electricity to power about 500 homes.

"This hits a market that's already nervous about winter supply," Mr. Evans said.

He noted that there is a limited pipeline supply for natural gas since a fatal pipeline explosion near Carlsbad, N.M., early this year. El Paso Natural Gas, which owns the pipeline, has rerouted only a portion of the gas that normally moves through that line.

El Paso's Carlsbad line is still under Office of Pipeline Safety jurisdiction since the Aug. 19 explosion that killed a dozen people. Two lateral lines are being used to send gas to California. Those two lines are now sending about 900 million cubic feet of gas per day to California, down from the 1.1 billion cubic feet per day sent on the one line before the blast, an El Paso spokeswoman said.

"This situation in southern California is suggesting that we probably need to build more pipeline capacity into that region," Mr. Evans said. "We need that capacity that was taken away by that pipeline explosion," and we need additional capacity, he said.

Meanwhile, the early arrival of cold weather in the West contributed to a net stock withdrawal last week, according to the U.S. Department of Energy's Energy Information Administration. The regional draw of 11 billion cubic feet left stocks at 301 billion cubic feet, or 18.9% below the five-year average, the agency said.

Also, shippers have attempted to transport gas to the West to take advantage of the soaring prices seen over the past week, but pipeline restrictions have limited shipments, marketers said.

Despite Tuesday's rally, which lifted the December natural-gas contract $2 this month, some traders predict heavy profit-taking Wednesday ahead of the long holiday weekend. The New York Mercantile Exchange will have a shortened session Wednesday, and the American Gas Association storage report will be released after the session ends. That means traders won't have an opportunity to react to the data until electronic trading Sunday evening, because the exchange is closed Friday.

While heating-oil futures edged lower amid some profit-taking pressures after Monday's gains, below-normal temperatures in the U.S. Northeast and Midwest, the two largest heating-oil markets in the country, and forecasts of cold weather for the rest of the week, should continue to underpin oil futures, analysts said.

Northeast temperatures are forecast to be up to 14 degrees below normal Wednesday, while Midwest temperatures are expected to be up to 12 degrees below normal Wednesday, according to Weather Service Corp., with temperatures expected to be below normal through the end of the week.

http://smartmoney.com/bn/ON/index.cfm?story=ON-20001121-000342-1042

Personal Note: Let me go out on a limb and guess that this won't be the last record high for the season. I can hear the gas bill lamentations already. "Geez Dorothy, we're going to have to cut back on Christmas this year; we can't afford $250 monthly gas bills."

-- Guy Daley (guydaley@altavista.com), November 21, 2000