Bolstered

Nuevo Energy, a Houston, TX-based exploration and productioncompany, bolstered its California position Tuesday by paying Texaco$61 million for interests in six oil and gas fields. Includingthese acquisitions, 87% of Nuevo’s total reserves and productionwill be based in California.

For the second day in a row, the futures market raced off to afast start as steady buying bolstered prices to their highest marksince December. But in contrast to Tuesday’s price action, whichfeatured the May contract finishing near its daily high,Wednesday’s rally ran into heavy overhead selling that trimmedthose gains into the close. May finished up 3.5 cents to $2.013,after notching a $2.07 high.

The July contract closed out the week on a positive note aslight short-covering and position squaring bolstered the market6.5-cents to settle at $2.035 on Friday. July was not the only bigwinner, with nearby August also coming to life. August was up 7.3cents bringing the 12-month strip to $2.329.

The Energy Information Administration continues to be bearish ongas wellhead prices this year but expects prices to remain abovethe $2/Mcf mark because of the possibility that temperatures willbe higher than normal this summer and coal delivery problems maypersist in Texas. In its May Short Term Energy Outlook, the EIAsaid it expects wellhead prices to average $2.15/Mcf this year,down 3.6% from the $2.23/Mcf average in 1997.