Downward

The Energy Information Administration (EIA) is predicting that natural gas spot prices will remain in the $4.80-$5.50/MMBtu range for the rest of 2003, assuming normal weather. Natural gas wellhead prices are projected to average $4.97/Mcf for the year, an increase of about $2/Mcf over the 2002 annual average, which will be the largest annual wellhead price increase on record, EIA said in its September Short Term Energy Outlook.

The Energy Information Administration (EIA) is predicting that natural gas spot prices will remain in the $4.80-$5.50/MMBtu range for the rest of 2003, assuming normal weather. Natural gas wellhead prices are projected to average $4.97/Mcf for the year, an increase of about $2/Mcf over the 2002 annual average, which will be the largest annual wellhead price increase on record, EIA said in its September Short Term Energy Outlook.

With little to look forward to other than moderating temperatures and another potentially triple-digit storage report to be released Thursday, natural gas futures traders favored the sell-side Tuesday in another quiet, holiday-week trading session. With that, August spent its third day as prompt contract plumbing near two-month lows at $5.24. It closed for the day at $5.317, down 9.4 cents for the session.

Seeing little in the way of new fundamental influences and getting only a late nudge downward from the storage report, the cash market generally marked time Thursday. Nearly all points were about a dime or less up or down from flat, with moderate gains in the majority. Upticks of 20 cents or more in quotes for San Juan Basin and Northwest (South of Green River) were the major outliers from the overall market.

As NGI sources had predicted, the bearish revision of storage data Thursday and the screen’s negative response had their cash impact Friday. Weekend prices sank in double-digit amounts at all points, with most declines measured at about a quarter or more.

Under significant downward pressure from the weak crude oil market and continued spring weather, April futures opened 24.7 cents lower Tuesday and more than wiped out the two previous daily gains with a solid 16.8-cent drop to close the day at $5.339.

After more than a $1 drop Monday and Tuesday, downward momentum in gas futures finally dissipated on Wednesday. In the morning it even appeared that the April contract was going to hold above $6, but bulls’ hopes were quickly dashed and the near-month contract ended the day down another 7.9 cents to $5.865, a far cry from the $8.50 high only eight trading days ago. The high for the day Wednesday was $6.115 but the low was $5.760.

Normally a trading day in which many points record price movement of half a dollar to a dollar or more would be considered rather volatile. But after more than a week in which most of the market recorded daily changes spanning several dollars, Tuesday’s activity seemed rather sedate by comparison. No doubt many traders welcomed a break from the recent spate of hyper-volatility.

Duke CEO Richard Priory said in order to deal with the downward pressure and volatility in the energy industry the company has taken and will continue to take some “very strong and decisive steps” to position the company for the uncertain future.