Extremely

The underlying fundamentals for natural gas prices — minus any weather-driven problems — remain extremely bullish, and sentiment in the gas market will improve over the coming months, according to a new report by Raymond James. Its current 2005 gas price forecast is $6.80/Mcf, with 2006 and long-term gas forecasts at $7.50/Mcf.

Citing forecasts for much of its market area indicating “extremely cool conditions” starting Thursday and continuing through the weekend, Transco said that effective with Thursday’s gas day it is not allowing excess storage injections under Rate Schedules GSS or WSS and will not allow any Park quantities or Loan payback. Also, effective Friday it will not allow due-pipeline (receipt make-up) nominations. The pipeline added that if it experiences a significant decrease in operational flexibility, it may limit the scheduling tolerance at pooling points to 1% or take additional actions.

Citing recent low temperatures and production losses in northeast British Columbia, Westcoast said Tuesday it was “experiencing extremely low linepack conditions.” In order to protect operational integrity, the pipeline said shippers’ account availabilities at all receipt points would be limited to their current production levels effective immediately. Account availabilities will be adjusted as production levels increase or decrease, Westcoast said. Kern River reported Tuesday afternoon being informed that due to problems with the Jonah Field’s supply of gas to the Opal Plant, cuts were likely in that day’s 4th nominations cycle. Shippers were urged to call suppliers to see if a supply realignment was necessary.

Citing continued extremely cold temperatures in its market area, Tennessee said an OFO Balancing Alert would take effect at 9 p.m. CST Wednesday until further notice for all LMS-MA balancing parties with meters located in Zones 5 and 6 (including the 200 and 300 lines). “These Balancing Party Contracts are required to maintain an actual daily flow that does not exceed the greater of 500 [dekatherms] or 2% of scheduled quantities,” the bulletin board posting said. A penalty of $15 “plus the applicable Regional Daily Spot price” per dekatherm will be assessed on imbalances in excess of the tolerance level.

Northeast utilities continue to report new gas demand records due to extremely low temperatures last Friday and Saturday, but those records are not expected to last long because more severe winter weather is on the way. The National Weather Service is expecting sub-zero temperatures Tuesday night in New England and snow and continued cold through the rest of the week.

Weekend prices rose by 20-55 cents at nearly all points Friday as new forecasts indicated that extremely cold conditions in the Northeast and Midwest will extend beyond this week, and that January’s worst conditions of all may begin around mid-month. The exceptions to overall bullishness were triple-digit declines at a few points serving the New England market.

Noting that it is currently operating with “extremely low linepack,” Kern River said Tuesday it is imperative that operators do not take delivery of more quantities than are scheduled. If drafting continues to be a problem, the pipeline said, further action will be taken.

The integrity of natural gas price reporting and price indices is “extremely important,” said the chairman of the Commodity Futures Trading Commission (CFTC), last week, but it is up to Congress to determine if any new rules are required to govern price reporting practices. However, Chairman James Newsome added he has “yet to see anything” that changes his belief that the commission and other regulatory agencies already possess the tools to address any misconduct that may occur.

Calling the integrity of natural gas price reporting and price indices “extremely important,” the chairman of the Commodity Futures Trading Commission (CFTC) said he believes it is up to Congress to determine if any new rules are required to govern price reporting practices. However, Chairman James Newsome added he has “yet to see anything” that changes his belief that the commission and other regulatory agencies already possess the tools to address any misconduct that may occur.