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Despite double-digit physical market increases and an earlyretest of the $2.80 level, natural gas futures tanked yesterday astraders weighed the impact of warm weather forecasts for the firstpart of October. After holding in the high $2.70s for most of themorning Monday, the November contract was hit with a round ofselling in the afternoon that pushed the price 16.8 cents lower toclose at $2.625.

Wednesday marked the first time in a week that double-digitmoves were nowhere to be found in the cash market. Most pointsregistered small gains of 2 to 5 cents, feeding off a strongfutures screen and a bullish American Gas Association (AGA) storagereport of a 26 Bcf injection.

Following aggressive buying and double-digit increases achievedin Wednesday’s Access trading session, the futures market cooledoff yesterday as physical traders eschewed the opportunity to belong gas at the $2.70 level for the month of August. Once themarket was unable to get past the $2.72 high from Access sellerscame out of the woodwork and demoted the September contract to$2.569, down 3.7 cent for the session.

After Monday’s almost universal double-digit increases, cashprices were on auto-pilot Tuesday, as they trended down from theprevious day’s results. Many traders said Monday’s run-up would bethis week’s high, pointing to moderating weather and the thecompletion of pipeline maintenance projects.

The potential for new natural gas-fired generating capacity overthe next decade is as much as double that of some initial industryforecasts, according to a new study commissioned by the INGAAFoundation.

Destin Pipeline Co. has filed at FERC to have cost limitationson its “CNG Lateral” waived in light of delays that pushed theproject’s cost to $35.1 million, well above $19.6 million allowedfor in the Commission’s certification of the project last year(Docket No. CP98-238).

FERC last week gave Petal Gas Storage the go-ahead to double thecertificated capacity of its storage facilities in Mississippi to10.4 Bcf. Petal Gas would accomplish this by drilling, leaching anddeveloping a second underground salt dome storage cavern identicalto its existing cavern. The proposed storage cavern would have thesame certificated capacity as the existing cavern (5.2 Bcf), andboth would have a combined actual working gas capacity of 5.8 Bcf.

Southern Co. is seeking a Securities and Exchange Commissionwaiver of Public Utility Holding Company Act rules so it can doubleits already massive investment program in nonregulated powergeneration assets primarily in North America over the next fewyears.

Bears roamed the gas trading woods in full force Thursday,sending cash prices down by a dime or much more at nearly allpoints. The biggest declines of about 35-45 cents occurred at thepreviously high-flying Transco Zone 6 and Texas Eastern M-3citygates in the Northeast. Although some Zone 6-New York Citydeals were still being quoted above $3, the average there fell intothe mid $2.80s.