Cold

While U.S. natural gas resources appear virtually unlimited,that doesn’t necessarily mean the industry can ramp up productionto meet the oft-heralded 30 Tcf a year market projected to developover the next 15 to 20 years, according to a Chevron U.S.A.exploration manager.

While U.S. natural gas resources appear virtually unlimited,that doesn’t necessarily mean industry can ramp up production tomeet the oft-heralded 30 Tcf a year market projected to developover the next 15 to 20 years, according to a Chevron U.S.A.exploration manager.

Natural gas futures chopped sideways for the second straightsession yesterday as traders were torn between shoulder and wintermonth pricing. While the October contract was limited to a tighttrading range and a 0.2-cent advance to $2.632, the Novemberthrough March strip bounded 4.1 cents higher to $2.978. Estimatedvolume was robust with 110,911 contracts changing hands.

Colder than last year wasn’t quite cold enough for a number ofLDCs reporting first quarter earnings. While temperatures duringthe first three months of the year were down, earnings weren’t ashigh as they could have been had winter weather been more normal.

All-around price increases Wednesday received support fromcontrasting weather conditions and rising power generation load(plus a tiny assist from a barely higher screen). Most upticks werein the neighborhood of 4-8 cents, although smaller ones were aslittle as two cents at the PG&E citygate.

New Century Energies (NCE) and Northern States Power (NSP), twoefficiently-run but merely mid-sized combination utilities, joinedthe merger parade last week, promising savings, greaterefficiencies and economies of scale. But the horns on Wall Streetdidn’t toot.

After two brief rally efforts failed to produce higher prices,the futures market again came under selling pressure as moreprominent bearish fundamentals more than offset below-normal marketarea temperatures. And in a rare occurrence, the 4.1-cent loss seenin the prompt March contract was outpaced by more substantiallosses in the April, May, June and July contracts.

For the third day in a row Wednesday, natural gas futures werelower as traders continued to discount the arctic cold front andfocus on the larger fundamental picture. Even as a wintry mix ofprecipitation spread from Texas to Washington, D.C. yesterday,sources continued to point to the large storage overhang andforecasts calling for warming temperatures by early next week. Theprompt January contract finished 1.9 cents lower at $1.906.

A combination of heat and cold served to keep cash prices on therise again Tuesday. Gains were fairly modest at a nickel or less inthe Gulf Coast, Midcontinent/Midwest and East Coast markets. Theywere primarily supported by continuing air conditioning load in theSouth.