Chance

After a strong opening at $2.28 failed to entice much in the wayof additional buying, natural gas futures gave back most of thegains achieved during Wednesday’s Access trading session anddrifted lower for much of the yesterday’s session. Although itsmomentum was decidedly to the downside Thursday, the Februarycontract did manage to post a higher high at $2.29 and escape witha modest, 0.8-cent advance to finish at $2.252. Estimated volumewas thin with only 45,585 contracts changing hands.

The mid-$2.60s have been a pivotal level for natural gas futuresover the past year. Last November, the December contract managed totrade up to $2.64 — the high price during the “winter thatwasn’t” — before crashing more than a dollar to February lows.Then in July, many market watchers pointed to the August’s abilityto clear the $2.60 level as a harbinger of things to come. OnWednesday once again a line was drawn in the sand at the $2.65level. If the market stays above that level, we can retest thehighs, bull traders insisted. But a settlement below that levelcould spawn a round of selling, countered market bears.

After being hit with a devastating combination of bearish newsFriday afternoon and Monday morning, traders at the New YorkMercantile Exchange had little choice when the market reopened. TheJuly contract took it on the chin, gapping lower on the open beforeposting a 7.1-cent decline to finish at $2.237. The August contractdid not fare any better, slipping 6.9 cents to $2.268. Estimatedvolume was solid with 78,116 contracts changing hands.

FERC earlier this week gave Williams Gas Pipelines Central onemore chance to settle the lingering, controversial cost-recoveryissues arising from the reformation of three of its gas supplycontracts for production in Colorado.

Lured by the chance to be a main supplier for the wealth ofgas-fired power plants planned for Texas, Aquila Energy bought theKaty Hub from Western Gas Resources last week. The $100 milliondeal is expected to close by April 30, although it still needs toclear the Federal Trade Commission’s Hart-Scott-Rodino Act.

FERC last week gave Williams Gas Pipelines Central Inc. one morechance to settle the lingering, controversial cost-recovery issuesarising from the reformation of three of its contracts for gassupply in Colorado.

Lured by the chance to be a main supplier for the wealth ofgas-fired power plants planned for Texas, Aquila Energy bought theKaty Hub from Western Gas Resources Monday. The $100 million dealis expected to close by April 30, although it still needs to clearthe Federal Trade Commission’s Hart-Scott-Rodino Act.

Traders finally got a chance to conduct business Monday for whatseemed like the first day in September with no tropical stormsimmediately threatening, disrupting or starting to move on afterhaving disrupted Gulf of Mexico production. “It was nice to have alittle window with nothing [storm-related] imminent,” one soucesaid. Cash prices reacted to what has been generally bearishfundamentals all along with declines of between a nickel and eitherside of a dime.

The April Nymex contract lost yet another chance to break out ofits recent trading range by falling 3.8-cents to settle Thursday at$2.134. “If April were ever going to break out of its tradingrange, perhaps today was the day,” a trader told GPI. “April brokeabove major resistance at $2.19, and forecasts are calling foranother potential cold front next week. Yet April fell hard afterreaching a high of $2.205. That tells me there is no wayspeculators are buying into the fact that fundamentals warrant ahigher move. It also shows they are wary of initiating fresh longpositions,” he said.