Directions

With politicians and economists pointing fingers in various directions to attach responsibility for California’s electricity problems, the quarterly UCLA business school economic forecast last Thursday predicted a recession for the state, particularly in the north, driven largely by the electricity crisis. A separate analysis by the university and Cambridge Energy Research Associates (CERA) looked at two scenarios, advocating perhaps a different course than the one charted currently by the state.

Prices responded accordingly Tuesday as just about everythingturned bullish for the spot gas market – chilly to very coldweather almost everywhere, rising futures in three importantcategories (gas, heating oil and crude oil), and expectations of alarge withdrawal volume in this afternoon’s storage report.

Just one week after the break-up of the KN/Sempra merger overpoor financials, KN Energy has started action on an intense assetdivestment strategy. The Colorado-based company sold $51 millionworth of various Gulf of Mexico (GOM) assets last week, includinginterests in HIOS, U-TOS and Stingray, to Leviathan Gas Pipelinewhich is controlled by El Paso Energy. The transaction closed June30.

Just one week after the break-up of the KN/Sempra merger overpoor financials, KN Energy has started action on an intense assetdivestment strategy. The Colorado-based company sold $51 millionworth of various Gulf of Mexico (GOM) assets last week, includinginterests in HIOS, U-TOS and Stingray, to Leviathan Gas Pipelinewhich is controlled by El Paso Energy. The transaction closed June30.

With conflicting influences in several directions, much of thecash market decided to take a break Thursday and not wander veryfar from Wednesday’s levels. Small gains at most points outweigheda few scattered decreases. Modest strength in the Henry Hub gasfutures contract was countered by crude oil futures falling harderthan it had risen Wednesday, even as the U.S.-led air strikescontinued against Iraq Thursday. And forecasts for widespreadbelow-normal temperatures during Christmas week apparently meantless to gas traders than the current still-relatively-mildconditions.

For the first time in several trading days, there was nodivergence between Eastern and Western market directions Wednesday.It was up, up and away all around as nearly all points registeredgains of around a dime or higher.