Appeared

One day back above $6 appeared to be enough for the time being as February natural gas futures, in their first regular session prompt-month contract action, slipped back below the psychological price level. Backed by a somewhat moderating weather forecast and the continued economic slump’s impact on demand, the February contract dropped 22.5 cents Tuesday to close at $5.859.

Despite most industry expectations looking for a natural gas storage withdrawal between 135 Bcf and 145 Bcf, it appeared that some traders were expecting an even larger number as the 147 Bcf pull for the week ended Dec. 19 pushed near-month natural gas futures values temporarily lower before they rallied Wednesday afternoon. In the shortened trading session, the January contract went on to close at $5.910, up 17.3 cents from Tuesday’s finish.

Price movement was close to evenly mixed in Thursday’s trading of month-ending supply, but it appeared that losses slightly outnumbered gains. Despite warming trends, there was still a bit of heating load for Friday in parts of the Northeast, Midwest, eastern South and Pacific Northwest, and cash quotes had extra support from November’s expiration-day gain of 28.3 cents Wednesday.

Although some traders earlier in the week had seen a rally in the East as unlikely due to lack of weather demand, the market appeared to defy forecasts of continued moderate temperatures in most of the region Friday by rising at a majority of points Thursday. It reversed a pattern in effect through Wednesday in which minority gains were almost all in the Midcontinent and Rockies; on Thursday those areas, along with some other western points, saw most of the declines.

Marathon Oil Corp.’s oil and natural gas production in 3Q2008 rose sequentially from 2Q2008 to 384,000 boe/d from 350,000 boe/d, but domestic gas production appeared to be flat sequentially and down from a year earlier.

Just when it appeared that MidAmerican Energy Holdings Co.’s acquisition of Constellation Energy Group would be a smooth transaction, EDF International (EDFI), the largest power producer in Europe, last week offered to acquire Constellation Energy for $8.50/share more than what Berkshire Hathaway’s MidAmerican Energy has bid. But MidAmerican Energy did not see the rival bid as a threat.

Initial expectations of a rapid return of Gulf of Mexico (GOM) oil and gas production from the outages caused by hurricanes Gustav and Ike appeared to be overly optimistic by Wednesday, and both the cash and futures markets were firmer in response. And although substantial cooling load is still subpar for mid-September in most areas, some slightly premature heating load is arriving to displace it, especially in the Northeast.

Destin Pipeline said Friday it had completed initial assessment of its offshore facilities and there appeared to be no significant damage. However, due to power outages affecting downstream pipes, Destin said it is unable to accept nominations from offshore receipt points at this time.

A coalition of five Senate Republicans and five Democrats — known as the “Gang of 10” — Thursday unveiled comprehensive, bipartisan legislation offering what appeared to be the first real compromise on offshore drilling, proposing to open additional Gulf of Mexico areas and allow the states of Virginia, North and South Carolina and Georgia to opt into leasing off their shores. The measure would not open coastal areas off states such as New Jersey and California, which have bitterly opposed offshore drilling.