Falling

Against a backdrop of falling crude oil and natural gas prices, the House last Thursday passed by an overwhelming margin legislation that seeks to curb “excessive” speculation in the energy markets.

Against a backdrop of falling crude oil and natural gas prices, the House Thursday passed by an overwhelming margin legislation that seeks to curb “excessive” speculation in the energy markets.

Most points kept falling Wednesday due to a prior-day screen plunge of 68.2 cents and unseasonably moderate weather continuing to prevail in many areas. Another bearish factor was the growing perception that Hurricane Gustav caused little significant damage to Gulf Coast infrastructure — either offshore or onshore — and restoration of shut-in Gulf of Mexico (GOM) production was under way and could be expected to ramp up fairly quickly.

Even with falling temperatures in the Friday forecast for many areas, prices rose at most points Thursday. As on Wednesday, most of the gains were fairly modest. The cash market did have a little prior-day screen support from the 4.7-cent gain by September futures Wednesday.

Falling points modestly outnumbered rising ones Wednesday as forecasts of cooling trends in several areas vied for influence with warming trends in other areas, continuing hot weather across most of the southern half of the U.S. and a prior-day futures gain of 15.2 cents. Most of the losses were considerably larger than the gains, so overall softness was clearly dominant.

With linepack falling to around the midpoint between its minimum and maximum target levels, Pacific Gas & Electric ended a systemwide high-inventory OFO Saturday after it had been in effect for two days. However, the utility said its California Gas Transmission (CGT) system’s Baja Path from the Southern California border was being constrained by 60 MMcf/d each day Friday and Saturday. “High overdeliveries earlier in the week resulted in sustained high system inventory, which we are still managing,” PG&E said. “These constraints will ensure the safe operation of PG&E’s system. While every attempt is made by CGT to avoid firm service level cuts, firm supplies coming into PG&E’s system on the Baja Path will be impacted by these constraints.”

Falling into a rather well worn pattern, June natural gas futures Thursday expanded the upside of the recent move by a few pennies before crashing back down to earth. The prompt-month contract notched a $11.428 high in the minutes that immediately followed the natural gas storage report’s release before retreating to close at $11.263, down 6.4 cents from Wednesday.

Tuesday’s cash trading market had a slightly larger number of points that were flat or recorded small gains than it did falling ones, but the losses were much larger in many cases, particularly in the West. Except for cold weather persisting in the Pacific Northwest, the market was losing cooling load in several other areas, and 80s highs in the South were limited to its central and western sections and Florida, with the coastal states from Georgia through Virginia largely limited to peaking temperatures in the low to mid 70s.

The Florida citygate was the sole location left out of falling prices at all other points Tuesday. The overall bearishness was primarily due to the previous day’s plunge of 76.8 cents by April futures, and to a lesser degree to the relatively moderate shoulder-month weather that several areas are experiencing in mid-March.