Amid

El Paso Corp. stock took a pummeling on Wall Street last week after the company lowered its earnings projections for 2002 and 2003 to accommodate a major cutback in its energy trading work force and other streamlining actions. The Houston-based energy giant plans to slash its trading staff, primarily the power side, by 50% in an attempt to ease the concerns of investors and credit rating agencies. The expected cost savings/proceeds from this and other moves, such as debt reduction and asset sales, will be channeled to El Paso’s core natural gas businesses — exploration and production (E&P), liquefied natural gas (LNG), and its midstream and pipelines facilities.

In the face of restrained capital and wholesale power markets, Calpine Corp., the San Jose, CA-based power plant developer/operator, indicated early this month in financial announcements that its near-term strategy is to transition from an aggressive, highly leveraged developer to a more financially conservative power plant operator, but at the same time seek expansion of its energy trading business through an alliance with more credit-worthy partners.

Amid the bullish combination of cold temperatures in the short-term outlook and warm temperatures in the long-lead forecast, natural gas futures rallied to their highest weekly close in five months Friday on continued short-covering by large speculative traders. The April contract received the biggest buying boost, trading 15.2 cents higher to close at $3.076. In doing so, it moved through resistance clustered at early-week highs in the $3.03-04 area.

Amid continued non-commercial short covering, natural gas futures worked their way higher Tuesday morning, only to fall late in the session as trade and local accounts took profits ahead of today’s release of fresh storage data. At the closing bell the April contract was 2.1 cents weaker on the day at $2.467.

Although this week’s winter siege likely was reaching its maximum area of penetration Wednesday, for the most part it had lost much of its price-boosting power. Except for big advances by Florida citygates and some citygates in the Northeast, the rest of the cash market had settled down for a generally flat performance, with scattered points showing 1 to 5 cent increases.

Williams’ common stock price dropped 22% Tuesday, amid a general market downturn, after the company estimated earnings, but said it would not have a complete and final earnings report until it assessed contingent liabilities related to Williams Communications Group (WCG), which was spun off last year.

Amid a heavy round of market-on-close commercial selling, natural gas futures dropped perilously close to new 34-month prompt-month lows yesterday as traders — armed with the knowledge that temperatures are well-above normal across much of the East — gained confidence that there would not be a short-covering rally until after the February contract goes off the board Tuesday. With that, February completed its penultimate trading session at $1.908, down 12.9 cents for the session.

After failing to sustain a move above Wednesday’s highs, natural gas futures tumbled lower into the close yesterday as traders took another crack at the psychologically important $2.00 mark. The February contract finished at $2.048, down 2.8 cents for the session and just above its freshly-etched low at $2.025. There was some bullish encouragement, however, from the March and April contracts, which managed to buck the trend and post modest gains for the day.

Amid updated weather forecasts confirming the warming trend that is set to engulf the entire Eastern half of the nation this week, natural gas futures dove lower Tuesday, as traders returned from the holiday weekend and promptly liquidated long positions initiated early last week. February took the selling squarely on the chin, gapping lower at the open bell, and not once looking back as it came just one tick away from notching a new contract low at $2.094. It closed with an even 13-cent decline at $2.106.