Dropping

Costs of new Canadian natural gas wells are dropping and the improved efficiency is slowing down deterioration of supply activity, a field contractor group says.

The cash market succumbed to a growing dearth of cooling load in the Midwest, Northeast and Canada by dropping at most points Tuesday. It also felt negative pressure from the previous day’s 16.1-cent decline by August futures.

After dropping to a new low for the move at $3.448 during Tuesday’s regular session, May natural gas futures were a little more reserved on Wednesday as traders debated the market’s next move. The prompt-month contract finished Wednesday’s regular session at $3.532, up 2.1 cents from Tuesday’s close.

After dropping less than a nickel on Monday, April natural gas futures rebounded on Tuesday, but traders and analysts were quick to note that a sustained tally was unlikely. The prompt-month contract closed 13 cents higher on the day at $4.282.

Richmond, VA-based Dominion Resources Inc. has affirmed its 2008 earnings guidance of $3.10 to $3.15 per share while dropping both its 2009 guidance and spending plans. The company said it has “more than adequate liquidity,” but given the current macroeconomic situation will be cutting $350 million from capital expenditures and reducing some nonfuel operating and maintenance expenses.

Richmond, VA- based Dominion Resources Inc. has affirmed its 2008 earnings guidance of $3.10 to $3.15 per share while dropping both its 2009 guidance and spending plans. The company said it has “more than adequate liquidity,” but given the current macroeconomic situation will be cutting $350 million from capital expenditures and reducing some nonfuel operating and maintenance expenses.

A strengthening U.S. dollar and a weakening oil complex dealt the natural gas futures market a one-two combination Friday, dropping September to a new low of $8.215 for the downmove, which began after August futures peaked at $13.694 on July 2. The prompt month contract finished at $8.248, down 32.3 cents for the session and off a whopping $1.141 for the week. The October contract also took it on the chin, suffering a loss of 32.9 cents and $1.164 for the day and week, respectively, to finish at $8.330.

After dropping $4.493, or 33%, over the last three weeks of trading, August natural gas futures took a little bit of a break Monday as traders assessed the current sub-$10 price level and the market’s likely next move. Starting out the week, the front-month contract gained 7.9 cents to close at $9.163 one day ahead of expiration.

After dropping $3.15 — or 23% — through Thursday from the move’s high back on July 2 of $13.694, August natural gas futures were given a rest on Friday as the contract closed at $10.570, up 3.3 cents on the day but $1.334 lower than the previous week’s close. Trading on Friday was more notable for what was missing on the day, which was an expected round of short-covering ahead of the weekend due to concerns surrounding numerous tropical disturbances and East Coast heat.