Evening

Amid stronger cash market prices and another round of blackoutsin California, natural gas prices finished on a positive note forthe third session in a row Monday, as traders covered shorts in anotherwise quiet day. April finished 2.8 cents better at $5.063.

For the third week in a row, natural gas futures came underheavy selling pressure in the Sunday evening/Monday morningovernight Access trading session, initiating a gap lower open whenregular open-outcry trading resumed Monday at 9:30 a.m. (ET). As itturned out, that was about all the excitement the market couldhandle for one day because prices remained almost unchanged,slipping only 2.9 cents through the session as traders elected toremain mostly on the sidelines. Although the change throughout theday was small, the damage done overnight was significant, demotingthe March contract to $5.821, 38.9 cents beneath Friday’s close.

El Paso Energy Intrastate (formerly known as Channel)experienced a rupture of its 30-inch line Monday evening nearBaytown, TX, east of Houston. There was no fire, but a voluntaryevacuation of the area was conducted, a spokeswoman said. Oneinjury was reported as a result of the evacuation, and as of middayTuesday everyone had returned home except for two families whosehomes were damaged, she said. No service interruptions are expectedas all demands are being met through gas re-routing or fuelswitching, the spokeswoman said. The line probably will be returnedto service by the end of the week. It is owned 50-50 by El PasoEnergy and Enron Corp. and is operated by El Paso Field Services.

Following on the heels of gains achieved in the Tuesday eveningAccess trading session and amid buying frenzies both before andafter the release of fresh storage data, natural gas futures spikedsharply yesterday as traders reacquired long positions liquidatedover the past two weeks.

Fueled by a supportive storage report, natural gas futures addedto gains achieved in Wednesday evening’s Access trading session ina sharp opening bell rally yesterday. Taking out resistance atprior highs of $2.62 and $2.66, the March contract advanced 10.3cents to finish at $2.667

Affiliated pipelines Texas Eastern and Algonquin notified shippersTuesday evening that OFOs (or a Critical System Warning in Algonquin’scase) similar to those canceled Monday (see Daily GPI, Jan. 25) would go into effect later thatnight. As before, the OFOs require uniform hourly deliveries in themarket area and carry other restrictions such as no acceptance ofdue-shipper imbalance nominations. Effective today Algonquin isallowing only Primary Firm services through its Cromwell (CT)Compressor Station.

Adding to losses sustained in the Monday evening Access tradingsession, gas futures continued lower yesterday in sympathy withfree falling physical prices and in expectation of a bearishstorage report today. After gapping a hefty 7 cents lower to openat $2.44 the spot month October sifted lower throughout the sessionto close down 9.2 cents at $2.427. Heavy estimated volume of 89,223served to authenticate the move lower.

No injuries or fire resulted from a rupture Sunday evening onone of El Paso’s two 24-inch pipes (Line 1201) in the San JuanTriangle south of the pipeline’s San Juan River Mainline Station.The ruptured line was isolated and the other one remained inservice. Monday’s throughput impact was estimated at 50-75 MMcf/d(about 3% of Triangle capacity); no scheduling increases were beingallowed for Cycles 3 and 4 of the gas day. El Paso expected tocomplete repairs Monday night and that Triangle capacity would beback to normal today.

Fueled by the season’s first hurricane hype and gains tacked onduring the Wednesday evening Access trading session, natural gasfutures gapped higher for the second day in a row yesterday asshort-covering and fresh buying created a tempest of bullishtrading activity. That buying pressure continued throughout much ofthe session, allowing the September contract to notch a new high of$2.905 before finishing at $2.898, up 10.6 cents from Wednesday’sclose.