Figures

Rebounding from a post-AGA sell off, natural gas futures clawed higher late yesterday as traders failed to demote prices beneath support at $4.05 for the second day in a row. At the closing bell, June futures were a penny lower for the session at $4.113. Estimated volume was relatively light considering the price action as only 66,491 contracts changed hands.

After gapping lower at the open, natural gas futures tumbled lower for the third day in a row and the sixth out of seven sessions as traders tested the bottom end of the market’s eight-week trading range. However, when the dust had settled and the orders counted at Nymex, it was clear that support had held, leaving traders slightly bullish heading into today’s expiration. On its penultimate day, the May contract closed 9.7 cents lower at $4.981, about 42 cents below where it was when it began its tenure as prompt month.

Beneath the hefty first quarter earnings’ figures for oil and gas companies, a more compelling tale is unfolding as both majors and independents operating in North America appear to be benefiting from the move to the drill bit. Production numbers so far are mixed, but some indicate that gas production is up significantly — with some companies predicting the best is yet to come.

After pushing higher but failing to fill in a key gap on thedaily chart, the March contract sifted lower yesterday as tradersset their sights on stubborn support in the $5.62 area. As it turnsout, $5.62 was little more than a speed bump as prices dippedeasily below that level in a post-AGA sell-off. The March contractwas hit the hardest, tumbling 50.1 cents to close at $5.518.

U.S. states have already received more minerals revenues fortheir share of production on federal lands within their borders andfor offshore oil and gas tracts adjacent to their shores than forall of 1999, according to the Department of the Interior’s MineralsManagement Service. MMS distributed more than $575 million to 34states last week.

“It figures, we got some winter weather after the winter wasover.” That was a Northeast gas buyer’s lament after a weekendblast of snow and cold sent regional citygates as high as the$3.60s (Transco Zone 6-NYC) Monday and had some Gulf Coast pointsedging over $3.

After plunging almost a dime lower in response to alarger-than-expected storage injection Wednesday afternoon, thefutures market shuffled sideways yesterday in ahurricane-abbreviated trading session. Traders were unable to gleanmuch fundamentally positive out of a natural gas market that isfaced with mild temperatures and little or no hurricane activity inthe wake of Floyd. The October contract finished at $2.546, down8.2-cents from Wednesday’s close.

The way FERC figures pass-through of costs in oil pipeline ratecases could hamper future use of converted lines, according toCommissioner Linda T. Key Breathitt, who issued dissenting opinionsin two oil pipeline cases involving Rio Grande and LonghornPartners Pipelines [OR97-1-001 and OR95-7]. In both cases theCommission ruled that the companies would not be allowed to passthrough the full purchase price of the pipelines, only thedepreciated original cost of the line. “In an area where Congresshas asked us to exercise regulatory restraint we turn around andapply textbook principles in a manner that may discourage futureconversions of oil pipelines to new uses,” Breathitt said. Theorders examine the corporate relationships between the companies toarrive at the conclusion that the companies are selling assets tothemselves. But Breathitt believes arguments about corporate tiesin these cases don’t apply. She was joined by Commissioner CurtHebert.