Buyers

Natural gas futures ended higher for the second session in a row Wednesday as buyers continued to take advantage of the lowest prices thus far this year. The October contract received the biggest boost, gaining 7.1 cents to close at $4.788. The prompt September contract followed suit, advancing 6.8 cents to finish at $4.745. At 40,761 estimated volume was light, an indication that traders are waiting on the sidelines ahead of Thursday’s storage report.

In sympathy with higher crude prices, and as another winter storm approached the Northeast, natural gas futures turned modestly higher in light pre-holiday trading Tuesday. Book squaring was the main feature in the abbreviated session. January closed 3 cents higher at $5.146.

After dropping a dime in a knee-jerk reaction to slightly bearish storage data (42 Bcf injection) released at 10:30 a.m. EDT, natural gas futures chopped sideways for the rest of the session Thursday as traders groped for fair value in a market that has witnessed a 58-cent trading range since Oct. 1. As it turned out, nothing was settled, with about half the traders, brokers and analysts surveyed by NGI yesterday expecting higher prices Friday and half looking for more weakness. The November contract closed at $3.828, down 9 cents for the session and just above support at $3.795.

It has definitely become a buyers’ market in the energy industry, with CMS Energy Corp. one of the latest to announce it will sell some of its prized income-producing assets to ensure it can pay the bills and restore investor confidence. Last Wednesday, the Dearborn, MI-based company surprised many by announcing it will consider offers on its entire domestic pipeline and field services businesses, worth an estimated $1.4 billion.

Transco will lift the only OFO it has ever issued, a systemwide Imbalance Operational Flow Order to all buyers that took effect Dec. 1 (see Daily GPI, Nov. 30), effective with Friday’s gas day. The order, which had penalties of $25/Dth for daily imbalances of at least 1,000 dekatherms exceeding a 5% tolerance over nominated volumes, was effective in easing operational concerns about system integrity, it said. Upon termination of the OFO, Transco also will return pool scheduling tolerances to 4% and will resume accepting receipt make-up nominations from shippers with negative (i.e., due the pipeline) imbalances.

After failing to test support in the mid $2.90s following a lower open Wednesday morning, natural gas futures contracts worked their way modestly higher in the afternoon as traders elected to look past another robust storage build to focus on hot weather and technical concerns. The September contract led the advance, rising 6.5 cents to close at $3.036. Estimated volume echoed the market’s tentative nature as only 60,979 contracts changed hands.

Natural-gas suppliers and buyers got what they wanted north of the U.S. border–a truly competitive market in delivery services is at hand, TransCanada PipeLines Ltd. has told the National Energy Board. TransCanada predicts that within five years, two-thirds of its long-distance capacity for 7.5 Bcf/d will be sold the same way as most of the gas in its lines, on short contracts. “The traditional regulatory compact,” which kept the system reliably full on long service contracts, “has been dismantled” by allowing rivals to build new capacity.

Gas suppliers and buyers got what they wanted north of the U.S. border and a truly competitive market in delivery services is at hand, TransCanada PipeLines Ltd. told the National Energy Board. TransCanada predicts that within five years, two-thirds of its long-distance capacity for 7.5 Bcf/d will be sold the same way as most of the gas in its lines, on short contracts. “The traditional regulatory compact,” which kept the system reliably full on long service contracts, “has been dismantled” by allowing rivals to build new capacity.

In a speech to natural gas buyers, sellers and transporters at the LDC Forum in Boston Thursday, Federal Energy Regulatory Commission Chairman Curt Hebert, Jr. challenged his audience to use all the “clubs in their bags” to ensure that free market forces — and not price caps — are the future of the gas marketplace.