Conditioning

Relatively light air conditioning load outside the West kept cash prices in a general decline Thursday, although nearly all drops were less than a dime and many points were flat or managed tiny gains. A bearish Nymex response to the storage report, prospects for continued weakness in weather fundamentals and the typical loss of industrial demand over a weekend are likely to have quotes falling again Friday, sources said.

Sources expect Tuesday’s generally mild softness to continue as air conditioning load recedes in the East and there is no near-term tropical storm threat to offshore Gulf of Mexico production. As if to reinforce their outlook, the energy futures complex experienced steep price dives Tuesday, with the August natural gas contract falling nearly a quarter and its crude oil counterpart plunging about $2 in expiration-day profit taking.

Rising air conditioning load across the South was insufficient to avert modest to sizeable price declines at nearly all points Wednesday. Flat Southern California border and Transwestern Permian numbers were the exception to declines ranging from about a nickel to about 30 cents in the rest of the market.

Prices fell Thursday in the wake of a large storage injection report and a continuing dearth of air conditioning load. Volumes and trading activity remained minimal in the absence of futures guidance, and sources reported that the feelings of grief and numbness from the attacks against New York City’s World Trade Center and the Pentagon were slow in dissipating.

Despite having considerably lighter air conditioning load than last week, the cash market ranged from flat to about a dime higher at nearly all points Monday. Most increases were fairly small, but Malin achieved one in the mid teens, while the day’s champion gainer of about 60 cents due a maintenance-related constraint was Cheyenne Hub. CIG recorded the only significant loss of more than a dime.

It was getting hot just about everywhere Tuesday except in the Upper Plains. The rising air conditioning load had a moderate price-boosting effect in eastern markets, but virtually none at all in the West.

As some sources had suspected, the recent buildup in air conditioning load wasn’t strong enough to sustain this week’s bull market in the wake of another big storage injection report and associated screen softness. Only small to moderate Rockies/San Juan increases went against the grain of overall market declines Thursday that were mostly between a dime and 30 cents but got as big as nearly $1.50 for California border deliveries into SoCalGas.

With little or no air-conditioning related demand on the horizon and amid a quickly eroding year-on-year storage deficit, natural gas futures slumped to new 9-month lows Monday as traders pressed the market’s downside yet again. After opening lower, the June contract was hit with a steady procession of commercial and speculative selling that took the market down to a previous low at $4.10 just before the closing bell. Unable to rebound, June closed just off that level at $4.113, down 17.3 cents for the day.

Benefiting from the hot summer and increased air conditioningloads in the Southwest, Reliant Energy announced it anticipates itsthird quarter earnings to be “substantially higher” than during thesame period last year. The company expects to exceed FirstCall/Thomson Financial’s projections of $1.07 per share by 25 to30%. Reliant’s adjusted earnings for the third quarter of 1999 were$283 million, or 99 cents a share.