Again

Once again it’s ‘Westward Ho,’ as Questar Pipeline looks to beefup its southern mainline and connect with Williams West (Kern RiverGas Transmission) for deliveries to California.

A steep price spike highlighted a lasting change in natural gasprices at Sumas, the Washington state entry point for exports fromBritish Columbia, say Canadian producers and marketers.

The bears were at it again at the New York Mercantile ExchangeWednesday when follow-through selling on the heels of Tuesday’sprecipitous price falloff took prices lower. The prompt Januarycontract gapped lower at the open and never looked back, posting a6.6-cent loss to $1.847 for the session.

Bearish fundamental factors once again took over at the New YorkMercantile Exchange Tuesday, sending the natural gas futures marketspiraling lower and nearly erasing gains registered over the priorthree trading sessions. Even cash prices, which continued to spikedramatically higher yesterday, did not influence the futuresmarket. After January opened below key support, the market neverlooked back as prices fell 18.8 cents to $1.913 at the closeTuesday. And just like that, the futures-cash basis has shrunk froma whopping 97 cents to a tight 14 cents over the past two days.

After seesawing throughout most of the morning, futures pricestumbled again Wednesday as traders surveyed the threat of freshbearish fundamental news. The front-month January contract finisheddown 7.2 cents to $1.886 at the close, barely off session lows of$1.88. Estimated volume was a healthy 67,274.

Plentiful amounts of gas in underground storage and relativelywarm temperatures once again had bears licking their chopsyesterday. But after two attempts failed to push the market lower,short-covering activity propelled the market higher during the lasthour of trading. December posted a 5.2-cent gain to $2.149 Tuesday,and in doing so, became the first contract since March to post again on its last trading day.

Traders with a penchant for market volatility and large priceswings may want to think twice about scheduling that three-dayweekend. Mondays, as of late, have been a roller coaster ride fornatural gas futures, with either double- digit increases (Oct. 26and Nov. 2) or declines (Nov. 9) welcoming traders back from theweekend. And the market held true to form yesterday, when forecastscalling for normal and above-normal temperatures managed toinspire fund, local and commercial sellers to push the Decembercontract to its two-week low. But in contrast to the declines lastMonday which came in a selling frenzy during the final twentyminutes of trading, yesterday’s price erosion was an all day affairthat left December down 15.4 cents to $2.305.

After posting modest gains last Thursday, the futures marketagain succumbed to selling pressure Friday as traders tried to pushthe December contract below support at $2.25. But, $2.265 was asfar as the contract could plumb and the prompt month was left tosettle for the week at $2.275. Sources pointed to bearishfundamentals and weak, last-day prices as reasons for the decline.

FERC yesterday approved an amended certificate for SouthernNatural Gas (Sonat) to build a controversial mainline extension tooffer competing transportation services to customers in northernAlabama and Georgia. The fate of the project, however, still hangsin the balance given that Interior Department’s Fish and WildlifeService (FWS) hasn’t issued Sonat a permit yet to build through aprotected public refuge.