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Boosted by the reformation of Tropical Storm Lili in the Caribbean, natural gas futures shot higher Friday as traders continued to cover shorts ahead of the weekend. Notching a 15.2-cent gain to close at $4.041, November becomes the first prompt natural gas contract to trade above $4.00 since June 2001 when the July contract was leading the market off its $10.10 high.

The Washington Utilities and Transportation Commission (WUTC) has granted Bellevue, WA-based Puget Sound Energy (PSE) a 5.8% increase in revenue to cover higher costs of providing natural gas service to customers. This service-related boost in gas-system revenue was offset by a pass-through rate reduction tied to lower PSE costs to buy customers’ gas on the wholesale market. The two separate but related rate actions approved by the WUTC — a $35.6 million increase in service-related revenues for PSE, and a $45 million rate decrease related to falling gas-supply costs — will save residential customers on average about 30 cents a month beginning in September. In June, PSE customers, which number about 613,000 in the state, received an average 22% cut in gas rates after wholesale gas prices fell. The earlier pass-through reduced the average residential gas bill by about $12 a month. The revenue increase resulted from weeks of review and collaborative negotiation between PSE, WUTC staff, the consumer branch of the state Attorney General’s Office, and various PSE gas customers. The utility’s last increase in general rates for gas delivery service was in 1995. The collaborative settlement approved marks the second phase of a comprehensive, multi-party review of PSE rates and service. In the first phase, the WUTC granted a 4.6% average increase in PSE electric rates, effective July 1. PSE serves primarily central and southern Puget Sound, including the cities of Everett, Seattle, Bellevue, Tacoma, Gig Harbor and Olympia.

Rather than extending FERC’s standards of conduct to cover mostly all energy affiliates of power/natural gas transmission providers, a Dominion Resources official proposed last week that the Commission focus on identifying the specific functions of energy transmission providers and their affiliates that could lead to sharing of competitive market information, and place restrictions in those areas.

Despite a late selloff in the nearby crude oil pit, natural gas futures held yesterday as traders continued to cover shorts amid modestly constructive technicals and bullish expectations ahead of today’s storage report. With that the March contract made it five in a row Tuesday, as it posted a 1.9-cent gain to close at $2.305. By contrast, March crude gave back half of Monday’s $1.15 advance to finish at $20.73 a barrel.

Electronic commodity exchanges such as TradeSpark LP, IntercontinentalExchange (ICE) and Dynegydirect have gained significant market share over the past few weeks as EnronOnline has fallen out of favor due to Enron’s financial turmoil, failed merger with Dynegy and subsequent bankruptcy filing.

Some traders were surprised by the market’s inability to add to Wednesday’s losses Thursday after breaking below key support at $2.50 on another bearish storage report. According to the AGA, 19 Bcf was withdrawn from the Consuming Region West and 3 Bcf was injected in the Producing Region, resulting in a net 16 Bcf withdrawal for the nation for the week ending Nov. 30 (There was no change in the Consuming Region East). The net withdrawal was well within the range of expectations, which were centered on a draw-down of 10-20 Bcf. However the net takeaway was undeniably bearish as it fell short of comparisons with last year (73 Bcf withdrawal) and the five-year average (55 Bcf withdrawal). Storage is now 30%, or 699 Bcf, above year-ago levels.

With a twist of irony that made even the most seasoned traders shake their heads, natural gas futures rebounded strongly yesterday afternoon, just moments after fresh storage data was released showing that the year-on-year storage deficit has finally been eliminated. With that the market broke a string of seven-straight Wednesday losses as traders propelled the new prompt month July contract up 17.1 cents to close at $3.981.

Analysts who cover Barrett Resources Corp. said yesterday thatonce the data rooms are opened, the Denver-based independent mayhave more than one cash-rich suitor interested in picking up thecompany’s assets, which are heavily concentrated in the naturalgas-rich Rocky Mountains. Barrett formally rejected a bid by RoyalDutch Shell Group, which yesterday launched a hostile takeover (seeDaily GPI, March 12).

Southwestern Energy has revealed that it will be forced to selloff some unidentified assets to cover the costs associated with aruling last week by the Arkansas Supreme Court. The court affirmeda 1998 decision of a Sebastian County Circuit Court awarding morethan $109 million in a class action to royalty owners of SEECO,Inc., a wholly-owned Southwestern Energy subsidiary.