Bullish

Since coined by Federal Reserve Chairman Alan Greenspan back in1995 to explain investors love of stocks, “irrational exuberance,”has come to typify the stock market and its unprecedented bullrally. But yesterday as stock prices plummeted again, “irrationalexuberance” was a more apt description of the natural gas futuresmarket, which spiked sharply amid a frenzy of short-covering andnew long accumulation. When all the dust had settled and the orderstabulated in the data room at Nymex, the numbers were staggering— the June contract rose a whopping 24.1 cents to finish at$2.689, setting a new 30-month high at $3.73 during a session thatsaw 102,978 contracts change hands.

Still flush from Wednesday’s bullish storage report, traders bidup natural gas prices in the pit at Nymex yesterday to notch thefourth advance in as many days. Including yesterday’s 3.5-centgain, the June contract has rallied 34 cents from Friday’s $3.01low. After notching a $3.385 high, the prompt month closed at$3.352.

The Williams Co.’s natural gas pipeline unit is bullish on NorthAmerican development and is looking north to Canada for its nextproject.

Most cash points continued their rise yesterday, but thepredominantly bullish sentiment among traders that was evidentearlier in the week showed signs of cracking. Few gains exceededmore than a nickel, while the scattered declining points fell nomore than a penny or two.

Buoyed by cool weather in the Northeast, bullish techincals andsupportive cash market prices, natural gas futures rumbled higheryesterday as traders bid up prices in an opening bell buyingfrenzy. After gapping higher at the open, the May contract spikedto a new life-of-contract high during the first hour of trading.From that point the buying waned and prices were left to chopsideways for the remainder of the session. May finished up 8 centsat $3.158.

If current bullish projections for adding another 5 Tcf of gasdemand nationally over the next 10 years is going to become areality, the pace of merchant power plant development will have toaccelerate and the gas business will have to catch up with it,according to a panel of experts at GasMart/Power 2000 in Denverlast week.

If current bullish projections for adding another 6 Tcf of gasdemand nationally over the next 10 years is going to become areality, the pace of merchant power plant development will have toaccelerate and the gas business will have to catch up with it,according to a Duke Energy executive speaking at GasMart/Power 2000yesterday in Denver. Brad Porlier, vice president for businessdevelopment at Duke Energy North America, said he’s unsure that thecurrent gas industry can meet the challenge, assuming merchantdevelopment can overcome a growing list of hurdles from siting topolitical issues.

Strong gas prices and the promise of robust demand fromgas-fired generation are making industry executives almost giddy.Production may be waning in the shallow Gulf of Mexico, but it iswaxing in the greater depths. Ditto for LNG imports. Canadianproducers look south and see market, north and see future supply.It’s all good if you can overlook the fact Wall Street isn’t payingmuch attention.

Demonstrating the volatile nature of the stock market this week,Dynegy’s stock price dropped almost 7% yesterday despite ChuckWatson, CEO of Dynegy, announcing that the company expects firstquarter earnings to be 20% higher than industry estimates.