Contract

It has been a good spring for bull traders at Nymex. SinceFebruary 26, the now-spot June contract has rallied nearly 70 centsto trade as high as $2.40 last week. But just as constructivetechnicals and low storage injection figures seemed to point tocontinued strength, the market spiraled lower Thursday and Friday.And while long liquidation spurred by the bearish one-two combo ofnuclear units coming back on line and moderating temperaturesacross the country were as good as reasons as any for the marketturning lower, traders remain divided as to the price directionheading into the summer. June finished the week mixed at $2.273, 2pennies above its close from the prior Friday, but 2.2 cents lowerfor the day.

Adding to Monday’s gains the natural gas futures continuedhigher at Nymex yesterday as technical buying lifted the Junecontract in active trading. And with that 4.8-cent rally to $2.359,June was able to successfully fill in $2.31-33 daily chart gap andnotch its highest daily close in more than a year.

The cash market resumed its climb Thursday, buoyed by a risingHenry Hub futures contract, a tightening supply situation,spreading cold weather and air conditioning load from Texas throughthe Southeast. A “lean” storage report Wednesday afternoon added tobullish sentiment, a marketer said.

Though the May Henry Hub futures contract eventually settled fora small gain of less than a penny, it was the screen’s morningflirtation with the $2.15-17 area that got most of the credit for astrong performance Tuesday by the cash market. Cash rises tended tofade out going westward to virtually nothing in California trading,but virtually all eastern points were up at least a nickel and inmany cases saw increases approaching a dime.

Adding to gains achieved in the Monday evening Access tradingsession, the May contract continued higher yesterday morning asbulls confidently bolstered their long positions. However, recentgains notched by natural gas have not come without a fight andTuesday was no different. After topping out at $2.17, the promptmonth reversed direction in the afternoon, nearly erasing itsadvance by the close. May finished at $2.136, up 0.8 cents on theday.

UtiliCorp United’s Aquila Energy signed a deal to supply gas tothe PowerSmith Generation facility near Oklahoma City, OK, Thecontract, which runs into 2004, is for 50 Bcf. “This is another ina series of long-term contracts that we’ve completed in the pastyear where we design unique energy risk migration arrangementsgiven specific independent power plant situations,” said Ed Mills,Aquila president.

UtiliCorp United’s Aquila Energy signed a deal to supply gas tothe PowerSmith Generation facility near Oklahoma City, OK, Thecontract, which runs into 2004, is for 50 Bcf. “This is another ina series of long-term contracts that we’ve completed in the pastyear where we design unique energy risk migration arrangementsgiven specific independent power plant situations,” said Ed Mills,Aquila president.

Taking a cue from a last-day uptick in the Henry Hub futurescontract for February, late-January cash prices ranged from flat toup about a nickel Wednesday. February bidweek numbers were alsomoving a bit higher in several instances, sources said.

Columbia Energy Services and the Municipal Gas Authority of Mississippi (MGAM) signed a 10-year gas supply contract that calls for MGAM to buy 10 billion Btu/d, or about 10 MMcf/d. “This acquisition provides firm economic supplies for our participating municipal gas systems and will assist them in meeting the needs of their customers,” said Neil Davis, MGAM general manager. ” MGAM, which represents 20 public agencies, provides gas supply and related services to municipalities that own and operate gas distribution systems in Mississippi.