Arrival

The Federal Energy Regulatory Commission plans to close up shop Thursday as a precaution while Hurricane Isabel threatens to plow through the Virginia, Maryland and Washington, DC region. Congress also plans to scale back its activities.

Despite the arrival of some of the coldest air in several years across much of the eastern half of the country, natural gas futures prices fell Tuesday as traders learned that moderating temperatures are forecast in some medium-range weather outlooks.

With the arrival of a frigid arctic air mass in the East and indications that it will stick around for a while, natural gas consumers should expect “a material increase” from their recent “eye-popping” December and January heating bills, according to UBS Warburg analyst Ron Barone.

In reaction to the arrival of the much-anticipated blast of cold air in the eastern half of the country, natural gas futures rocketed higher Wednesday as early short-covering by funds and commercials triggered waves of buy-stop-loss orders. By virtue of its $5.50 high trade, February notched a new all-time contract top and traded within 3 cents of the 21-month prompt-month high made by the January contract on Dec. 13. It closed at $5.43, up 32.3 cents for the session.

Despite expectations of Old Man Winter’s arrival Friday in the upper Midwest, Great Lakes and Northeast, spot prices were flat to down a few cents at most locations with even larger declines in the West where temperatures remained well above normal. The weekly gas storage report of a 1 Bcf withdrawal apparently had a little something for everyone on Thursday. It came in lower than many had expected and added a little bearish pressure to the cash market, but the withdrawal was bullish relative to the 33 Bcf injection during the same week last year, and that apparently was a factor in the 9.6 cent increase in December futures.

The arrival of a new parent with deep pockets made an immediate difference to Westcoast Energy’s pipeline system in the western Canadian natural gas drilling hot spot of British Columbia. The ink was barely dry on the final agreement for the US$8 billion purchase of Westcoast by Duke Energy Corp. before the newly-appointed president of the resulting Duke Energy Gas Transmission Canada, Bob Reid, gave the green light for a C$338.4 million (US$215 million) expansion project.

Due to its assertion that natural gas demand has not rebounded with the arrival of lower prices and remains 8 Bcf/d less than year-ago levels, Lehman Brothers lowered its 2001 benchmark natural gas price forecast Tuesday for the second time in a month from $5.75 to $5.00/MMBtu.

Despite the arrival of another severe winter storm — this onein the Midcontinent — the majority of spot points leaned to thedownside Thursday.

Despite the coldest weather of the season, the futures markettumbled lower yesterday as traders relieved technical overboughtconditions by unloading new long positions. Cash prices, whichslipped for only the second time in eight trading sessions, werealso seen as a negative factor. After opening near the bottom ofMonday’s wide trading range, bears wasted little time takingJanuary down 10.7 cents to settle at $2.522.