-----Original Message-----
From: 	Arnold, John  
Sent:	Thursday, October 11, 2001 7:01 PM
To:	Lavorato, John
Subject:	

The y/y spreads have come in decently over the past week and a half.  The 2/10 spread has moved from 104 to 94.  It may be a good time to move the 3-10 to a cal 2 trade.  Pira just gave their seasonal conference in NY and they are very bullish long term gas.
	Pira's
	forecast		Nymex 
Cal 2 	2.45		2.99
Cal 3	3.00		3.31	
Cal 4	3.70		3.40
Cal 5	4.00		3.48
Cal 6	4.10		3.57
Cal 7	4.20		3.66
Cal 8	4.30		3.75
Cal 9	3.60		3.84		(TransAlaska Highway Pipeline)
Cal 10	3.80		3.93
3-10	3.84		3.59

Regardless of what you think of Pira and long term price forecasts, the rest of the market does listen.  They have a tremendous amount of respect in the industry and affect how customers and producers hedge.  The flow, which has been buyers over for the way backs, I think will get more pronounced, especially if the front goes down.  

In the past week, I've sold Duke 40,000/d Cal 6-10 and 25,000/d Cal 7-10.  I've sold PGE maybe 30,000 day Cal 4-5.  The only seller has been El Paso whom I believe is hedging production.  He is trying to pressure the y/y spreads as a spec trade that I think was/is being done to front run the corp hedges.  I've used it as an opportunity to put a lot of spreads away for inventory down the road.  If you want to buy this strip back in the next 6 months, I think it's going to be much easier/cheaper to roll it closer.