Data

After averaging a hefty 91 Bcf a week in storage injections since April, the natural gas market fell sharply off that pace last week with a 53 Bcf refill, prompting some market observers to rethink how much the blackouts affected gas demand. Using that bullish news as an updraft, the October futures contract soared immediately to $5.08 following the 10:30 a.m. EDT report.

Oil and gas drilling in North America appears to be on the upswing, according to oil and gas industry service companies that keep track of offshore and onshore statistics. Offshore drilling in the Gulf of Mexico was up in July more than 5% over a year ago, according to GlobalSantaFe Corp.; Baker Hughes. Inc. found that the number of rigs actively exploring domestically has increased since the beginning of the month; and the Canadian service sector reports a summer drilling boom is more than making up for a slow spring.

After checking lower in the moments following the news that 93 Bcf was injected into storage last week, the natural gas futures rebounded Wednesday as scale-down and technical buying propelled the market back above the $5.00 mark. At $5.05, the August contract closed 11.6 cents higher for the session, and just a few ticks below its $5.075 high on the day.

As NGI sources had predicted, the bearish revision of storage data Thursday and the screen’s negative response had their cash impact Friday. Weekend prices sank in double-digit amounts at all points, with most declines measured at about a quarter or more.

After failing to successfully probe the downside, natural gas bulls took control Thursday at Nymex following the news that only 80 Bcf was injected into underground storage facilities last week. At 12:45 p.m. EDT the June contract was up 22.5 cents for the session at $5.885. It closed at $5.772, 11.2 cents above Wednesday’s close. With 96,927 contracts changing hands, trading volume was heavy.

After extending to new five-month highs on news that a whopping 48 Bcf was pulled from storage reserves during the previous week, natural gas futures sifted lower in the late morning and afternoon Thursday on profit-taking ahead of the weekend. At $5.709, May futures finished in the bottom half of its daily trading range, up 3.2 cents for the session but more than a dime off its $5.83 high notched earlier in the day.

Dynegy Inc. is out of the communications business, after agreeing to sell its three-year-old North American communications division to an affiliate of 360networks Corp., a data telecommunications services company. Under the terms of the agreement, 360networks will acquire Dynegy’s entire North American communications operations, including a 16,000-mile high-capacity broadband network that has access points in 44 U.S. cities. No financial details were disclosed.

A proposed state law submitted last week to the California legislature would punish industry sources providing phony natural gas pricing information to major national industry published indices. The California Public Utilities Commission (CPUC) would be required to use only natural gas price indices determined by the regulators to be “reliable and verifiable.”

FERC staff has asked the California Independent System Operator (CAISO) to provide the federal agency with additional information the grid operator has collected that may shed further light on whether other power companies engaged in questionable trading strategies executed by former energy trading giant Enron Corp.