Early

After touching the lowest level in almost two weeks earlyMonday, the June futures market was bid higher throughout the restof the session as traders took profits from last week’s sell-off.June finished up 5.8 cents for the day at $2.311, just off its$2.32 high.

In the race to obtain as much of the bounteous Florida market aspossible, Williams has taken the early lead over Coastal as thecompany reported 1.3 Bcf/d in nominations received during theBuccaneer Pipeline open season. The open season ended in lateMarch.

Choppy trading continued at the New York Mercantile Exchangeyesterday as the futures market was pressured lower early, only tocome roaring back in the afternoon. The February contract finishedup 3.9 cents to $1.809.

During the great Rocky Mountain region price depression of theearly 90s, MMBtus were going for pocket change; producers werelucky to get a buck for an MMBtu. Today they are enjoying justunder two bucks. The average price for gas at Opal, WY, in 1998 was$1.81 slightly down from the ’97 boom year ($2.01/MMBtu) but stillin gravy-land. The Rockies have enjoyed two years of relativeprosperity, but some say “look out for what’s ahead.”

Rep. Steve Largent (R-OK) plans to introduce a comprehensivebill to restructure the retail power industry early in the 106thCongress.

Although it was nowhere near as dramatic as the price move thatdeposited prices near all-time winter lows, last week’s futuresgains-slowly and steadily-were gaining the attention and acceptancefrom both technical and fundamental traders. And despite a largestorage surplus and continued uncertainty about winter weather, ifprices are able to trend higher into the New Year, the market willlook back at last week’s rebound as the end of the downtrend. Theprompt January contract chopped higher Friday, making daily highsby noon before softening into the closing to finish up a penny at$2.074.

January futures gapped lower on the daily charts for the secondday in a row Tuesday by opening 11 cents less than Monday’s low.But in contrast to Monday’s downward price movement, yesterdayfeatured an upward price trend for the session. At the closingbell, the prompt month had climbed its way back up to $1.958-only1.8 cents off Monday’s settle.

The meltdown of the early December aftermarket continued Tuesdayalthough many points made small rallies late in the day from theirbottom levels of the morning. Prices in nearly all production areaswest of Appalachia sank well below $1.50-a level in the “old days”at which many producers used to consider summer shut-ins. ThePG&E citygate was one of the only points still registeringquotes above $2.

CMS Energy surprised the industry early last week when itreached south from its Michigan gas and electric distribution baseto buy the Panhandle Eastern and Trunkline Gas pipeline companies -pipes, storage and LNG terminal – from Duke Energy, locking in itsown supply line to the Midcontinent and Gulf Coast. The companyalso articulated a strategy to capitalize on demand for gas-firedpower generation in the Midwest, and ended the week bydemonstrating it.