Blows

Bulls continued their New Year’s celebration Tuesday at Nymex as the coldest weather of the season buoyed natural gas futures prices to levels only registered on one other occasion in the last 10 months. However, similar to Monday’s price action, the market could not hold onto its early-session highs and prices eased during the afternoon Tuesday.

With focus shifted away from last week’s diminutive storage withdrawal (80 Bcf) and onto forecasts for the coldest air thus far this winter, the natural gas futures market erupted higher Monday as sellers backed away from a steady stream of commercial short-covering and speculative buying. The February contract received the biggest boost in the market’s first trading session of the year, rallying 63.8 to close at $6.827. At 48,897 contracts, volume was extremely light for the session.

Recent six- to 10-day temperature outlooks by the National Weather Service’s Climate Prediction Center (CPC) have been off by a mile, and CPC Senior Forecaster Ed O’Lenic admits the atmospheric situation currently is the “kind that forecasters dread.”

Recent six- to 10-day temperature outlooks by the National Weather Service’s Climate Prediction Center (CPC) have been off by a mile, and CPC Senior Forecaster Ed O’Lenic admits the atmospheric situation currently is the “kind that forecasters dread.”

Buoyed by the coldest air thus far this season, the natural gas futures market turned higher Wednesday as weak shorts covered their positions. Cash prices, which were up nearly 75 cents at some locations, were also seen as a price supportive factor, traders agreed. The December contract received the biggest buying boost, up 17 cents at $4.897. At 59,166, estimated volume was very light considering the size of the price hike.

Power plant builder, The Shaw Group Inc. suffered two major blows from financially-challenged merchant power producers last week, buying out one project from NRG Energy and halting construction on another at the direction of Mirant Corp.

The Bush administration was dealt a series of blows last week in its attempt to withhold secret documents of Vice President Dick Cheney’s energy task force from public scrutiny.

ANR Pipeline unloaded an arsenal at the Guardian Pipelineproject yesterday in a protest and request for dismissal filed withFERC. If Guardian is built, it would be a bypass of ANR, resultingin 650 MDth/d of firm transportation capacity being turned back tothe Coastal subsidiary. That turnback capacity would mean a loss of$54 million in annual revenue, ANR said, of which $26 million couldbe avoided if Wisconsin Gas accepted a competing proposal presentedby ANR. ANR is requesting it be allowed to charge Wisconsin Gas anexit fee if Guardian is approved.

The new policy statement on pipeline certification, which callsfor incremental pricing of projects filed past a certain deadline,came under fire at FERC last week from a cross-section of interestsin the natural gas industry.