Degree

A great deal of cooling load across the southern tier of states combined with a moderate amount of heating load in the Northeast and (to a lesser degree) Midwest to produce rising prices at nearly all points Tuesday. A 6.4-cent screen gain the day before added a little extra impetus to the bullish cash market.

Citing Florida forecasts of 90-degree-plus temperatures, Florida Gas Transmission told market-area customers it was issuing an Overage Alert Day notice Monday at 25% tolerance for negative daily imbalances.

Except for 90-degree-plus high temperatures in parts of the West, fundamental weather demand remained subpar in most markets Thursday. Yet cash prices managed to solidify and strengthen the mild rally that had begun the previous day.

Although not without a degree of dissension that has become the norm, the California Public Utilities Commission Thursday agreed to grant an additional $67 million in public goods charge monies for energy efficiency programs this year and next, and to give Southern California Gas Co. a $6.3 million reward for its recent natural gas procurement program under an incentive rate mechanism in place for the past nine years.

Pressured by forecasts calling for temperatures to crest the 50-degree mark in the Northeast this weekend, natural gas futures continued lower Tuesday as bulls appeared increasingly content to ignore the expiring March contract in favor of the spring and summer months.

Raymond James analysts have an “unusually high degree of confidence” that domestic natural gas-driven stock prices will move up in an “unusually short period of time,” and now believe that there is a better than 75% probability that gas leveraged energy stocks will move up significantly in the next six to eight weeks.

Natural gas prices reflect a degree of enthusiasm that is typical for this time of year, particularly if there are hurricanes lurking in the Gulf of Mexico, but according to one market observer, once traders weigh healthy storage inventories against expected winter weather, an option strategy designed to take advantage of high levels of volatility may be the trade to make.

The natural gas market should experience a high degree of volatility over the next few years as reserves from older fields decline and new frontiers are slow to open up, according to Richard Sherrill, chief operating officer of Duke Energy North America (DENA). Delivering the keynote speech at GasMart/Power 2002 in Reno, NV, he estimated the volatility could continue for as much as 10 years, since it will take a significant amount of time to exploit and transport new supplies in the far north, or to build the extensive infrastructure required for increased LNG imports.

The natural gas market should experience a high degree of volatility over the next few years as reserves from older fields decline and new frontiers are slow to open up, according to Richard Sherrill, chief operating officer of Duke Energy North America (DENA). Delivering the keynote speech at GasMart/Power 2002 in Reno, he estimated the volatility could continue for as much as 10 years, since it will take a significant amount of time to exploit and transport new supplies in the far north, or to build the extensive infrastructure required for increased LNG imports.