EnronOnline Trading System Shuts Down
November 28, 2001 12:55:22 (ET)
(adds trader quotes, gas price spike, company background)
NEW YORK, Nov 28 (Reuters) - Enron Corp's (ENE,Trade) Internet-based energy and metals trading system was shut down on Wednesday, shortly after a leading credit-rating agency downgraded the company's debt to "junk" status, energy traders said.
It was not clear whether the EnronOnline trading system was halted deliberately or by a technical problem. Enron officials were not immediately available for comment.
"We were watching the board and suddenly it went blank," said one Northeast natural gas trader. Activity on EnronOnline was halted just after 11 a.m. (1600 GMT), the trader said.
Energy traders said the Standard & Poor's announcement that it was downgrading Enron debt triggered a brief spike in New York Mercantile Exchange natural gas futures, to $2.82 per million Btu, but prices later slipped to the low-$2.70s, still up more than 11 cents from Tuesday.
"We spiked on the Enron news. People ran in to cover any exposure because of the uncertainty. I think they're expecting the company to file for Chapter 11 (bankruptcy)," said one Midwest gas and power trader.
"The Enron (stock) halt sent a shock through the (power) market and all trading stopped. The Enron guys pulled all their numbers (on EnronOnline)," another trader at a Houston-based energy firm said.
U.S. natural gas and electricity firms have been steadily scaling back deals with Enron for several weeks as fears mounted about the former energy giant's credit standing.
"People have been balancing their risk exposure over the last few weeks," another Midwest trader said.
Enron was by far the largest U.S. natural gas and electricity trader, with industry analysts estimating it was once involved in some 20 percent of daily trade in those markets.
But since last month, when the company became the target of a Securities and Exchange Commission investigation of financial dealings with partnerships, the Houston-based company's market share has steadily eroded.
EnronOnline until recently accounted for about 60 percent of the daily trade volume handled by Enron.
Enron shares were briefly halted on the New York Stock Exchange this morning following the credit-rating downgrade. After the stock reopened, it dropped $2.84 to $1.30 on the New York Stock Exchange. Enron shares closed Tuesday at $4.14.
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