Falls

As the curtain slowly falls on gas supply from the Gulf ofMexico Continental Shelf, the deep-water waits in the wings.Canadian producers are scripting their role on the U.S stage. Andthe Alaskan gas play’s Lower 48 audience can’t buy tickets to theshow for about a decade.

As the curtain slowly falls on gas supply from the Gulf ofMexico Continental Shelf, the deep-water waits in the wings.Canadian producers are scripting their role on the U.S stage. Andthe Alaskan gas play’s Lower 48 audience can’t buy tickets to theshow for about a decade.

Demonstrating the volatile nature of the stock market this week,Dynegy’s stock price dropped almost 7% yesterday despite ChuckWatson, CEO of Dynegy, announcing that the company expects firstquarter earnings to be 20% higher than industry estimates.

In a remarkably uniform display of softness, prices fell byabout a nickel Tuesday at nearly every point across the board.Rarely has the market been so consistent with the great majority ofdeclines clustered within the range of 3-7 cents and with nogeographical bias.

A team of El Paso Natural Gas executives last week tried toclear away any confusion that their transportation customers mayhave had with the pipeline’s new capacity-allocation proposal, buttheir efforts appeared to have fallen short as some shippers leftthe FERC technical conference more bewildered than when they wentin.

Vector Pipeline management was all smiles last week asconstruction on the pipeline kicked into high gear and one of itsmain competitors, CMS Gas Transmission & Storage Co.’s TriStatePipeline, halted efforts to pursue its application forconstruction. While TriState foundered, the Vector project, whichwould make 1 Bcf/d of transport available from western Canada toChicago, is on schedule to start service in October.

Despite continued above-normal temperatures across much of theU.S., natural gas futures rumbled higher yesterday as local tradersbid up prices in an attempt to set off buy stops positioned abovethe market. However, by Monday afternoon it was apparent they wereonly partially successful, and after notching a $2.255 high theFebruary contract eased lower to close at $2.216, a 4.3-centadvance for the session. Estimated volume was low with 48,189contracts changing hands.

The swing trading pattern immediately following Christmas didn’tseem very much different from the days preceding the holiday: agenerally softer market, with declines of up to a dime Monday atmost points, arrayed against conspicuously higher prices fordeliveries into the New York City area. One thing that did change,however, was generally flat numbers for the Rockies and California,markets that had participated in the overall weakness last week.

What had seemed like a mildly softer early aftermarket in swingdeals done Tuesday got much weaker Wednesday. Influenced greatly bya falling screen but also by a continuing lack of positivefundamentals, nearly all points were down a dime or more. NorthernCalifornia was a rare bastion of relative market strength in theU.S. Malin and the PG&E citygate dropped only about a nickel asPG&E repeated last week’s unusual action of issuing alow-inventory OFO on a summer weekday.