Direction

Industrial gas users have called on the Federal Energy Regulatory Commission to jettison Tennessee Gas Pipeline’s proposed changes in its currently effective transportation tariff to shield the pipeline and its paying customers from credit-risky shippers. They also object to FERC’s designation of the North American Energy Standards Board (NAESB) to develop generic creditworthiness standards for the industry.

With little in the way of fresh fundamental or technical direction, natural gas futures prices chopped sideways Friday as light short-covering and hot weather forecasts were tempered by lower cash market prices. The September contract worked its way higher throughout the first two hours of trading, but hit the skids late in the session as it fell to its settlement price at $2.858, up 1.6 cents for the session. Estimated volume was light, with only 58,581 contracts changing hands.

Few if any market observers a month ago predicted near-month futures prices would be approaching $3.50/MMBtu in March given the large surplus of natural gas in the nation’s storage fields and the weak economy. But it happened, and now consultants and analysts are battling over which path prices will take in the next few months. In one corner, Houston-based Simmons & Company International believes the puzzling spurt in natural gas prices is over, while in the other corner analysts at Raymond James & Associates say it’s here to stay.

The Office of Pipeline Safety (OPS) has taken a number of “steps in the right direction” to improve its oversight of the safety of natural gas and hazardous liquids pipelines, but it still has a long way to go, a General Accounting Office (GAO) official told Congress last week.

Bulls and bears eyeballed each other across the gas futures pit Monday, but in the end neither group really flinched. The March contract ended the day down a couple pennies with a lower low and a slightly lower high compared to Friday. March closed the day at $2.117, down 2.1 cents. Without a substantial change in market fundamentals, a standoff appears likely.

Pending a major change in direction at the Environmental Protection Agency (EPA), natural gas investors could get an unwanted “coal-inscopy” next month, according to analyst Fred Schultz of Raymond James & Associates Inc. Coal-fired electric generation in the country could expand by up to 40,000 MW.

Pending a major change in direction at the Environmental Protection Agency (EPA), natural gas investors could get an unwanted “coal-inscopy” next month, according to analyst Fred Schultz of Raymond James & Associates Inc. Coal-fired electric generation in the country could expand by up to 40,000 MW.

The current high cost of energy, particularly natural gas, andthe continuing energy crisis in California prompted President BushMonday to retract an earlier promise to press for restrictions incarbon dioxide (CO2) emissions from power generation. Curbing CO2emissions would boost demand for natural gas at the expense ofother dirtier fuels, particularly coal and oil.

Last week’s yo-yo market pattern continued into the weekend asprices reversed direction once again Friday, falling between 15 and50 cents at nearly all points. California remained the contrarymarket with larger declines at the border and Malin and the day’srare uptick at the PG&E citygate.