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With little on either the technical or fundamental news front, natural gas futures shuffled sideways and lower yesterday, as traders weighed moderating temperatures against the potential for a bullish storage report Wednesday. At the closing bell the September contract was 4.1 cents lower at $2.999. The 12-month strip suffered only a minor setback, down 1.6-cents at $3.443.

Weather that either was already bringing snow or was expected todo so soon in several regions, accompanied by some initial screensupport, pushed the cash market sharply higher Thursday at nearlyall points. Only the PG&E citygate and Southern Californiaborder registered drops amid overall gains of about 50 cents ormore. Many of the larger increases were clustered in the snowyRockies/Pacific Northwest.

An “absolutely incredible” 9 to 12 Bcf/d reduction in naturalgas demand over the last six weeks, led by industrial users whohave either switched or shut down production, has been the primemover in the recent decline in storage withdrawals, according to areport by Raymond James Energy analysts. A continued rout ofindustrials could bring with it a significant reduction in overallindustrial output and a recession.

An “absolutely incredible” 9 to 12 Bcf/d reduction in naturalgas demand over the last six weeks, led by industrial users whohave either switched or shut down production, has been the primemover in the recent decline in storage withdrawals, according to areport by Raymond James Energy analysts. A continued rout ofindustrials could bring with it a significant reduction in overallindustrial output and a recession.

Depending on your perspective, California either moved towardfuture solutions to its nagging energy crisis or took several stepsbackward yesterday with the launch of its electricity bulk buyingprogram for long-term, fixed-price supplies.

Pacific Gas and Electric Co. said late yesterday that six of itsnatural gas suppliers, accounting for 36% of its daily supply, haveeither already cut off supply or could stop delivering gas by Jan.23. In addition, several other suppliers, accounting for another30% of daily supplies, have told the utility that they areconsidering stopping deliveries because of PG&E’s inability topay on or prior to delivery.

Generally the cash market failed to find any support from eitherAGA’s big storage withdrawal report Wednesday afternoon or thescreen’s strong push upwards Thursday. With the exception ofupticks at a few scattered points, cash numbers ranged from flat todown nearly a dollar at Transco Zone 6 (NYC). Most of the declineswere between about a nickel and 30 cents.

In an emergency request filed Wednesday, Pacific Gas andElectric (PG&E) delivered a strongly-worded ultimatum to FERC -either revoke the authority for sellers to charge market-basedrates in the out-of-control California bulk power market and takeother actions by “no later than the close of business on Dec. 21,”or it will seek relief from the D.C. Circuit Court of Appeals inWashington. At press time Thursday, the Commission had notresponded to the utility’s demands.

The New York State Public Service Commission has acted to eitherfreeze or decrease the distribution portion of charges to naturalgas customers of Niagara Mohawk Power through Aug. 31, 2003 as partof a multi-year rate and restructuring plan.