Data

After edging modestly higher in the 30 minutes following release of storage data showing a 208 Bcf withdrawal, the natural gas futures market kicked into overdrive at 11 a.m. Thursday as bulls made another attempt at the $6.00 mark. However, after notching a new all-time high in March futures and a new 23-month prompt contract top, the market slumped at the close, denying bulls their coveted $6.00 print yet again. March finished at $5.828, up 18.4 cents for the session but 8.2 cents off its new $5.91 peak.

In a Critical Notice Tuesday, Algonquin said recent forecast data for its service territory show demand continuing to strengthen in response to colder temperatures. In order to mitigate conditions that could threaten its firm service capability, the pipeline said it “is imperative” that effective with the beginning of Wednesday’s gas day, shippers and point operators limit their daily variances between scheduled deliveries and actual deliveries to 2% or less. Any quantity outside the 2% due-pipeline tolerance will be deemed unauthorized and charged a $15/Dth penalty, Algonquin said. Also on Wednesday, the following restrictions will take effect: no nominated increases through Stony Point Compressor Station except for primary no-notice; no forward-haul IT or Authorized Overrun anywhere on the system; and no due-shipper gas available anywhere on the system.

A large group of generators last Monday collectively urged FERC to reject a bid by several California parties to gain access to documents or materials produced or obtained by the agency in its nearly year-long investigation of manipulation in western energy markets.

After dipping to new two-week lows following the announcement that 95 Bcf was pulled from storage inventories the week prior, natural gas futures turned higher late Friday morning and managed to claw back above unchanged on the day. With that the January 2003 contract expired at $4.988, up 2.6 cents for the day and about 70 cents above where it began its tenure as Nymex prompt contract back in late November.

Confronted with bullish near-term forecasts and bearish longer-lead weather outlooks, natural gas futures traders chose to side with the latter Tuesday as they quickly took back a lion’s share of Monday’s 12-cent advance. By virtue of its 9.4-cent decline and $4.226 close Tuesday, the January contract again rests near the bottom of the $4.16-48 trading range. The same range has bounded the market’s price moves since Nov. 18.

Northwest warned shippers that based on available data, it may need to invoke a Declared Overrun Entitlement Period as early as Tuesday. The entitlement would apply to delivery points north of Kemmerer (WY) Compressor Station, which is considered a longtime bottleneck on the pipeline’s system. Northwest explained Thursday that over the past few months it has allowed shippers to draft the system on a limited basis to work off their Receiving Party imbalances. But during the past week the drafting has been excessive, it continued, and as documented in daily bulletin board reports, Northwest’s balance at the Jackson Prairie storage facility “is rapidly decreasing.” Also, maintenance scheduled for Tuesday and Friday of this week and on Sept. 4 (see Daily GPI, Aug. 23) will require that Northwest rely on storage to balance the system. The storage activities on the maintenance days likely will involve withdrawals from Jackson Prairie and injections into Questar’s Clay Basin facility. Northwest’s storage account must be full on Sept. 30, as required by the Jackson Prairie partnership agreement.

As many traders had anticipated, Wednesday afternoon’s dime-plus uptick in natural gas futures translated into strong cash gains at most points Thursday. However, prices again deteriorated greatly in the capacity-constrained San Juan Basin, which was joined in its softness by Rockies pipes as supplies backed up there, largely unable to get to California and east-of-California markets via El Paso.

Gathering momentum as the trading session wore on Thursday, natural gas futures extended to new six-week highs as traders were forced to grapple with the bullish one-two combination of strength in the crude oil market and a lower-than-expected 53 Bcf storage injection for the week ending Aug. 9. The September and October contracts caught the biggest updraft from the buying, each gaining 21.7 cents to close at $3.127 and $3.172 respectively. At 139,856, volume for all the contracts in the gas pit was heavy and served to punctuate the price move.

As part of its affidavit on price-manipulation practices in western energy markets, PacifiCorp has turned over to FERC a “sampling” of audio-taped transactions to corroborate claims that may have been an unknowing “intermediary” in a number of “ricochet” trades with third-party energy companies during the latter half of 2000.