Fails

Southern Union’s plan to take its merger proposal straight toSouthwest Gas shareholders was dismantled Monday, as SouthernUnion’s two court actions intended on delaying the merger betweenSouthwest and Oneok were rejected. Southwest Gas shareholders areexpected to vote in favor of the merger today. Southern Uniondeclined to comment.

MCN Energy Group surprised observers and angered some investorsyesterday by announcing the cancellation of its Michigan E&Psale and a sharp change in strategic direction to a more regionalfocus from a national one.

Six inches of snow in New York wasn’t enough to convince futurestraders to resume the up-trend the American Gas Association storagereport so thoroughly wiped out last week. The April contract movedsharply lower for the third session in a row, closing down 4.2cents to $1.717. Shortly before the close, the contract broke belowwhat was deemed a key support level at $1.70 to post a low of$1.695 for the day. The $1.755 high was reached just after theopening bell.

Traders returned Monday from a long holiday weekend to find thecash market about as weak or even weaker than it had been prior toChristmas, depending upon the market area. A warming trend andsofter futures were cited as reasons. The Gulf Coast, last week’sbargain basement region for gas, was only dropping a nickel to adime. But Western points, which had been riding high on the basisof having the nation’s chilliest weather, fell anywhere from about20 cents (PG&E citygate) to as much as 50 cents (Stanfield).

Producers who may have been tempted to sing a few (paraphrased)bars of “It’s beginning to look a lot like winter” upon seeingTuesday’s weather reports probably stifled the urge after cashprices at most points fell by widely varying amounts. The softnessoccurred despite cold to very cold temperatures pervading almostevery part of Canada and the U.S.

Even with massive amounts of offshore gas remaining off-lineMonday, the gas markets for both late September and October bidweekchose to pay more attention to bearish fundamentals elsewhere.Except for rises of a nickel or more for deliveries in theNortheast market area, which depends mainly on Gulf Coast supplies,incremental September numbers were falling by a dime or more atmost points.

Overall the cash market Thursday decided one bearish storagereport in the hand was worth more than two tropical storms in thebush. But although nearly all points checked in as flat to downabout a nickel, sources said the softness probably would have beenquite a bit greater if it hadn’t been for September’s thirdstraight weekly storm threat to Gulf of Mexico production,especially in light of the screen’s nickel-plus drop.

The July Nymex contract looked poised to build on gainsyesterday by opening strong then immediately testing resistance inthe $2.20-21 area. However, for the second day in a row resistanceheld, leading to profit taking that sent July spiraling down tosettle at $2.156, a 3.5-cent loss for the day.

As sources had predicted, Wednesday’s run-up on the Nymex screenset the stage for cash price rises Thursday, which were abetted byfurther futures gains. There was even some expected cold weatherdemand in the central and eastern sections of the U.S. to help giveprices a little boost, traders said. Increases were on the modestside, mostly within a range of 2-5 cents.