Bail

Rescinding gains made shortly after the opening bell, the natural gas futures market was sent lower Thursday morning by traders unimpressed with government estimates suggesting that 134 Bcf was pulled from storage last week. However, after bottoming out at $6.75 shortly before 11 a.m. EST, the January 2004 contract — boosted by supportive weather and cash prices — mounted a sustained rally that resulting in its second-highest-ever settlement price. It closed at $7.122, up 12.9 cents for the session.

On the eve of short-term electricity rate increases to bail outthe state’s two major private-sector utilities, California’slegislature opens its 2001 session today with a special concurrentsession called by the governor to develop solutions on an emergencybasis for the state’s continuing electricity supply and pricecrisis. Any measures passed can be effective within 90 days of thegovernor signing them.

Fueled by continued below-normal temperatures and amidconflicting weather forecasts, natural gas futures galloped higheryesterday as institutional investors covered short positionsestablished over the past two and a half months.

After a lower opening failed to attract follow-through selling,natural gas futures rallied Friday as traders covered shorts aheadof the weekend. The December contract notched its low for the dayat $2.755 in the first hour of trading before bubbling higher tofinish at $2.884, a 5.8-cent advance on the day. Estimated volumewas above-average, with 80,226 contracts changing hands.