Continued

NGC Corp. announced it is reorganizing its marketing and tradingoperations to reflect continued convergence of the gas and powerindustries and to “meet growing and different customer demands fora single source supplier.” In particular, the company announcedplans to combine the trading functions of Natural Gas Clearinghouseand Electric Clearinghouse, its gas and power marketing operations,and to make its gas liquids business a separate enterprise.

The June Nymex contract lost another 4.4 cents to $2.134 Monday,as traders continued to test just how long the spot month can holdabove major technical support at $2.11. June reached a low of$2.125 yesterday before last minute buying pushed the contract toits higher settle.

Consolidation in the drilling/oilfield services industrycontinued this week, with the announcement that Baker Hughes andWestern Atlas plan to merge in a tax-free, stock-for-stocktransaction valued at $5.5 billion. It will create a company with$6.5 billion in annual revenues and 36,000 employees.

The May Nymex contract continued its spirited dive into lowerterritory Thursday by falling another 7.0 cents to settle at$3.328. May has now lost nearly a quarter since Tuesday, andestimated volume has totaled more than 250,000 contracts over thelast two days. “The amount of trading volume has been incredible.Of course, open interest had been at an all time high, so theseheavier trading days should be expected. Much of this is the workof speculative funds who continue to take profits and exit theiropen positions ahead of May’s expiration next Tuesday,” a sourcetold GPI.

Cash prices continued going up at most points Wednesday, oftenrepeating Tuesday’s gains of between 3 and 9 cents. Butshell-shocked traders were more interested in discussing what onecalled the “precipitous” drop in May futures and its implicationsfor both April and May cash numbers. “I’d bet a lot of people gotcaught with their pants down” by the screen’s plunge, a marketersaid. Several sources said the Nymex drop caused daily cash dealsdone late to fall.

The May Nymex contract continued its strong charge higher onThursday, reaching a high of $2.605 before ultimately settling up6.1 cents at $2.562. More impressive than the increase, however,was the estimated volume figure. Coming on the heels of Wednesday’shigh trade volume, Thursday saw over 100,000 contracts tradinghands. This leaves little doubt speculators played a role in May’srise yesterday. Even though current Henry Hub prices are 15-20cents lower than that, the current heat wave is waking people up tothe possibility of extreme air conditioning demand this summer, ananalyst told GPI. “The supply/demand balance has been so tight forso long, that his extra demand is highlighting potential problemsthis summer. There are already problems with coal delivery inTexas, and if that continues into the summer, watch out,” he said.

The Western Natural Gas Futures contract on the Kansas CityBoard of Trade has continued its rapid expansion, with openinterest surpassing 9,000 contracts for the first time everTuesday. KCBT said long-time participants have been “putting onincreasingly large positions” and “a number of new participantsalso have entered the market.” A floor trader mentioned PG&Eand Southern Energy Marketing as being two big players. KN Energy,Oneok and Duke alsowere reported as recent big entrants.

The April Nymex contract continued its late week rally byclimbing another 4.3 cents to settle Friday at $2.343. The moveleaves April at the highest price it has been since February 6th.

The April Nymex contract gained another 6.1 cents to $2.300 onThursday, as the contract continued to move higher following thebreakout from its recent technical trading range. Despite thestrong rally and heavy estimated volume of 72,113 contracts, theupsurge stopped just short of breaking through its next resistancelevel at $2.305.