Drop

Despite the downturn in the U.S. economy and the recent drop in natural gas and oil prices, Houston-based El Paso Corp. expects to meet or beat Wall Street’s third quarter earnings estimate, CEO William A. Wise said Thursday. The corporation expects full-year 2001 earnings to total $3.30 per diluted share before non-recurring charges, and meet or exceed First Call’s third quarter estimate of $0.74 a share.

Following Monday’s 9% price drop, natural gas futures were held to an extremely-tight, nine-cent price range yesterday as traders elected to wait for fresh fundamental data to be released Wednesday. Unable to push to fresh lows or highs, the October contract notched an inside day on the daily chart yesterday, closing 1.5 cents stronger at $1.925.

In sympathy with the largest single-day drop in crude oil prices since the Gulf War, and amid continued fears that a global recession is inevitable, natural gas futures funneled to new 30-month lows Monday, as non-commercial traders extended their short holdings in a market notably devoid of buyers. The October contract was the hardest hit, tumbling 9% or 19.3 cents to close at $1.91. The October contract is set to expire at 2:45 p.m. (EDT) Wednesday, an hour later than other daily settlements this week, in an effort to accommodate the 2:00 p.m. (EDT) release of fresh storage data.

Despite the drop in natural gas prices, Vancouver-based Methanex said Tuesday that the shutdown of its 470,000 tons/year Medicine Hat, AB facility, which uses natural gas in its methanol production, has been extended for an “indeterminate period” because of the plant’s “current non-competitive cost structure.” However, Methanex said it would move ahead on construction of a new facility in Trinidad, which it said will be less costly to operate.

The expected path of Tropical Storm Chantal over the Yucatan Peninsula and expectations of a much larger weekly storage injection took a little wind out of the sails of the gas futures market Monday, with the September contract showing a nickel gap lower from Friday’s low on the daily charts. However, after that initial weakness, futures proceeded in a very tight sideways band throughout the day in an unusually tranquil session. September ended the day at $3.187, down 11.6 cents from Friday’s close.

Having lost much of the supporting elements for higher prices from earlier in the week, the cash market yielded to the inevitable Friday with sizeable across-the-board declines. Losses were measured in the teens at nearly all eastern points, while larger drops in the West were topped by dollar-plus plunges at the California border-SoCalGas and OFO-devastated PG&E citygate.

Although California officials were gaining optimism from new electric generation plants finally coming on line last week and others expected to come on line in the next two weeks, there were signs that the electron rush of the past few years may peter out if the current uncertainties surrounding the state’s electricity markets continue to fester.

Prices were falling almost across the board Tuesday in both late-June swing deals and in bidweek trading. The screen was an obvious negative influence, but of greater impact was a growing feeling that prospects are dim for the market to pull out of its tailspin anytime soon.

Although California officials are gaining optimism from new electric generation plants finally coming on line today and in the next two weeks, there are signs that the electron rush of the past few years may peter out if the current uncertainties surrounding the state’s electricity markets continue to fester.