Complex

Natural gas futures joined the rest of the energy complex’s slump on Tuesday over renewed U.S. economy recession fears and moderating temperatures. February natural gas shed 32.3 cents on Tuesday to close at $7.670.

December natural gas futures Tuesday broke rank with the oil complex and gained ground. Traders cited near-term supportive weather forecasts as aiding the bullish cause but cautioned against any sustained advance. November futures rose 4.7 cents to settle at $8.021, and December gained 5.5 cents to finish at $8.354. December crude oil swan-dived $3.15 to $90.38/bbl.

September natural gas futures rose a stout 11.8 cents to settle at $6.208 as traders touted the still hefty discount of natural gas to the petroleum complex and the idea that weather-driven higher prices would ultimately occur.

More time will be needed for the global liquefied natural gas (LNG) developers to work out complex economic, technical and marketing details involved in building added liquefaction capacity, and thus, plans for a new LNG receiving terminal at Port Arthur, TX, remain on hold, according to senior officials at San Diego-based Sempra Energy. They spoke Wednesday on a first quarter earnings conference call with the financial community, reporting earnings that were robust, but down over a record quarter a year earlier because of accounting adjustments related to natural gas trading activities.

Natural gas futures jumped higher Wednesday afternoon in sympathy with a similar rise in the petroleum complex, which was sparked by an escalation of turmoil in Nigeria and U.S. refinery outages. After putting in a low of $6.560 in morning trade, June natural gas took off higher in the afternoon to record a high of $6.920 before closing at $6.900, up 31.9 cents on the day.

A group of attorneys general from the Midwest has reviewed the operation of natural gas markets and found “…that a complex spiral of factors has been driving [natural gas] prices to unprecedented and unjustified levels” and “the most troubling aspect of natural gas trading is that policymakers really cannot decipher what goes on….”

After ignoring the price drops in the petroleum futures complex almost entirely on Tuesday, October natural gas futures couldn’t look away a second day in a row. In addition to petroleum weakness, prompt month natural gas was helped lower Wednesday by positive news from the Gulf of Mexico, settling at $11.201, down 45.6 cents on the day.

While the entire petroleum futures complex saw large declines in a holiday-shortened trading session Friday, October natural gas futures ended up settling at $11.691, just 6.6 cents lower than Thursday’s settle but $1.885 greater than the previous Friday’s close. With small amounts of natural gas production returning to the Gulf of Mexico, questions as to the extent of the damages and the duration of shut-ins still remain.

Cash prices rose sharply Wednesday morning on the heels of the futures market but then reversed course when the entire energy futures complex suddenly plummeted. However, most cash averages showed daily net increases of 15-35 cents, with Florida, the Gulf Coast, Northeast and Midwest points posting the highest gains and with smaller gains in the West.