Despite an early dip and a temperature reprieve forecasted by the National Weather Service (NWS), natural gas futures stayed hot Monday, as traders continued to cover shorts following last week’s 14% rally. Saving their best for last, bulls were most active at the close Monday, as they pushed the September contract an additional 4% higher on the day to $3.267, a 11.8-cent gain for the session. Estimated volume was heavy with 105,487 contracts changing hands.
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Southeast Forecasted to Need Plenty of Power Over Next Decade
With all signs pointing to a continued population boom and steady economic growth over the next several years, key parts of the Southeast will see a dramatic upturn in the amount of power they will require over the next decade, an executive with a leading economic forecasting firm said last Thursday. One region alone, the South Atlantic, is going to need to be supplied with 30% more power over the next 10 years than was supplied in 2000, Mary Novak, managing director-energy consulting with DRI-WEFA, said at a conference looking at the Southeast’s energy infrastructure.
Wary of Bearish Fundamentals, AEC Locks in Prices on 30% of Production
AEC said it has locked in fixed prices for the first nine months of 2002 on 600 MMcf/d of its gas production, or about 30% of its forecasted gas sales. In Canada, 370 MMcf/d was locked in at an average AECO equivalent price of C$3.80/Mcf, and in the U.S. Rockies, 230 MMcf/d was sold forward at an average Opal equivalent price of US$2.61/Mcf.
Weekend Quotes Softer, But Strong Rally Seen This Week
The drop in demand over an extra-long holiday weekend and aforecasted trend of more moderate temperatures in some market areastowards the end of the weekend were enough to drag cash priceslower Wednesday. But due to a big last-minute screen jump and avery large storage withdrawal number, sources predicted asubstantial rebound this week.
Technicals Boost Futures Past Bearish Fundamentals
Despite warming temperatures, both forecasted and actual, thenatural gas market posted its second day of gains Thursday in atechnically driven trading session. After a strong open, theDecember contract received a boost from short covering by tradersbetting that the market may have reached a short-term bottom in thelow $2.40s. The prompt month finished at $2.496, up 4 cents on theday.
Transportation Notes
PG&E called a system-wide OFO with a 7% tolerance for gasday Saturday, Nov. 6, due to high inventory and forecasted highinventory for Sunday and today as well. The OFO called was Stage Iwith a $1.00/Dth noncompliance charge.