Expiration

Leases for oil and gas development along the southern fringe of the Piceance Basin in western Colorado are nearing their expiration as a citizens’ action and the federal Bureau of Land Management (BLM) are blocking five exploration/production (E&P) companies, including a unit of Encana Corp.’s U.S. operations, spread over a five-county area.

January natural gas fell slightly at expiration Wednesday as traders see the market in a balancing act between holding technical support and withstanding a storage surplus that is not only wide, but continuing to increase. By the close January shed 2.8 cents to $3.084 and February eased 2.9 cents to $3.121. February crude oil fell $1.98 to $99.36/bbl.

January natural gas drifted lower and February inched higher in uninspired trading Tuesday such that even options expiration could not whet trader appetites. Traders noted no attempts to either attack or defend nearby options strikes, and futures prices settled within fractions of Friday’s close. At the closing bell January had slipped 0.2 cent to $3.112 and February had added 0.3 cent to $3.150. February crude oil rose $1.66 to $101.34/bbl.

December natural gas settled modestly higher Tuesday as traders prepared for a double whammy in the form of a government inventory report and options expiration Wednesday. In addition, December futures expire Monday following an extended holiday period. At the end of the day December had added 1.6 cents to $3.415 and January had tacked on 0.3 cent to $3.561. January crude oil added $1.09 to $98.01.

December natural gas rose Monday as traders covered short positions before options expiration on Wednesday. At the close December had gained 8.3 cents to $3.399 and January had risen 6.2 cents to $3.558. January crude oil fell 75 cents to $96.92/bbl.

September futures limped to a weak expiration Monday as traders factored in natural gas’ strong seasonality and tendency to reach a low at this time of the year. At the close September had fallen 7.4 cents to $3.857 and October skidded 8.2 cents to $3.830. October crude oil added $1.90 to $87.27/bbl.

The February natural gas futures contract took a nasty fall on expiration Thursday. Traders noted that a 174 Bcf withdrawal reported by the Energy Information Administration included a 10 Bcf adjustment, thus tempering the amount of gas actually used.

Given a little boost from the modestly firmer expiration of October futures and an almost imperceptible return of higher temperatures in the South, the September daily market ended Wednesday with a near-repeat of Tuesday’s trading — prices nearly all within a narrow range around unchanged.

William Reilly, co-chair of the president’s oil spill commission, believes that the deepwater moratorium should end before the anticipated Nov. 30 expiration deadline, say energy analysts.