Factors

Although it acknowledged political and regulatory factors that continue to be uncertain, Standard and Poor’s Ratings Services reported last Thursday sighting “signs of life” in California’s private-sector utilities. The uncertainties that still cloud the state’s energy picture go well beyond the outcome of the proposed new settlement plan for bankruptcy-bound Pacific Gas and Electric Co., according to S&P brief analysis, “California’s Utilities: Another Step Forward?”

Despite bullish technical factors, natural gas futures slipped lower Wednesday as traders considered the possibility that the EIA will report a third straight, record-setting weekly storage injection on Thursday morning.

The natural gas futures market is back in an uptrend, and despite mostly bearish fundamental factors, is not having a difficult time finding reasons to move higher. On Friday it was hype over a new hurricane forecast, which helped cap last week’s choppy trading action with an impressive, 18.5-cent advance. On Monday, it was technical short-covering, with bulls charging toward at key upside target at $6.52.

Paced by triple-digit advances at Midwest and Northeast citygates and on Dominion in Appalachia and several Midcontinent pipes, nearly the entire cash market put in a strong weekend price performance in Friday’s super-volatile trading. Flat San Juan Basin numbers missed out on the price party, and other western points tended to see most of the smaller gains of less than 30 cents.

What a difference a week can make. Weighed down by forecasts for moderating temperatures and technical selling, the futures market ended the month of January on a negative note, with many traders sensing that the seasonal top was already in place. Cut to Friday, however, and the trading landscape had completely changed. Weather forecasts were calling for another wave of below normal temperatures, crude oil and its related products were testing new highs and natural gas was looking back over its shoulder at the $6.00 mark, believed unobtainable just a week before.

A lack of cheap, easy drilling prospects, a succession of price shocks and industry consolidation are some of the main factors behind the downturn of natural gas production in North America, according to financial analyst Irene Haas.

A lack of cheap, easy drilling prospects, a succession of price shocks and industry consolidation are some of the main factors behind the downturn of natural gas production in North America, according to financial analyst Irene Haas.

With sub-zero wind chill factors due Wednesday, it probably didn’t surprise anyone to see most Northeast citygates skyrocketing by multi-dollar amounts Tuesday into quadruple-digit averages. But other than a lift of about a nickel in Dominion prices and a few larger gains in the Rockies, the super-strength of Northeast prices was not reflected elsewhere.

Economic factors, plus low power prices, an ice storm, a rate refund and pension fund problems have led Standard & Poor’s (S&P) to revise the outlook for Duke Energy from stable to negative.