Caught

With California caught in the “midst of a profoundlyserious…crisis” in its deregulated energy markets, the CaliforniaPublic Utilities Commission (CPUC) has called on FERC to “actimmediately” on its complaint against El Paso Natural Gas toprovide some price relief for natural gas and electric customers inthe state.

With the U.S. Senate in a holding pattern until after the election, a rumored recess appointment by the White House to extend Chairman James J. Hoecker’s tour-of-duty at FERC by another year also has been drawn into the no-fly zone, awaiting Tuesday’s election results.

The energy industry’s revived interest in the dormant AlaskaNatural Gas Transportation System (ANGTS) has caught the attentionof FERC Chairman James Hoecker.

For the second day in a row, the natural gas futures market wascaught in tug of war as traders weighed their options-either buyinto the recent rally or sell, expecting a return to thelong-standing downtrend. The indecision could be seen inyesterday’s price action where prices trended higher in the morningonly to turn sharply lower in the afternoon. The May contractfinished 4 cents lower at $2.096.

Caught in the midst of heated criticism of FERC’s proposedauction mechanism, Mississippi River Transmission (MRT) isdefending its proposed new auction procedures from attack bymarketers and producers.

Natural gas futures, which have been caught in a downtrend sincelast summer, ticked quietly lower yesterday in a dull tradingsession. No fresh news was seen to lift the market higher and as aresult, the March contract was free to follow the overall trend byslipping 1.9 cents to $1.776 at the close. And although the Marchcontract has only slipped 5 cents lower since becoming the promptmonth on Jan. 27, it has dropped a whopping 82.4 cents, or morethan 30% from its $2.60 high set on April 8.

Swelling open interest and large long positions held byspeculators finally caught up with the May Nymex contract onMonday, as the spot month torpedoed 17.8 cents lower to close theday at $2.479. In so doing, the contract easily broke below the uptrendline that was lending major support in the $2.51-53 area. “Ifeel like I’ve been kicked in the face,” one source said.