Forecasts

Based on forecasts of warmer weather in Wisconsin and its projection of nominated receipts at the Marshfield, WI interconnect with Viking, ANR withdrew Thursday the Marshfield OFO that had been in effect since Tuesday (see Daily GPI, Dec. 21).

Due to forecasts of colder weather, a System Protection Warningtakes effect today until further notice for MRT’s mainline north ofthe Glendale (AR) Station. MRT recommended that customers withinterruptible and Authorized Overrun gas on the mainline re-sourcethose volumes to the East Line. The East Line is a lateral about 90miles long from Trunkline in central Illinois east to the St. Louisarea, connecting with NGPL along the way. If excess volumescontinue on the mainline, MRT said, it will issue an OFOrestricting that line to FT only.

Fueled by forecasts calling for cooler temperatures throughoutmuch of the country later this week, natural gas futures probedhigher in two distinct buying surges yesterday. The first push cameshortly after Monday’s lower open, when traders bid the Januarycontract to $2.50. However, those gains were erased almost entirelyby early afternoon, intra-day profit taking. But the bulls were notfinished, and after digging in their heels at $2.47, weresuccessful in pushing prices through $2.50 late in the session. TheJanuary contract finished up 6.3 at $2.509.

After a lower opening failed to attract follow-through selling,natural gas futures rallied Friday as traders covered shorts aheadof the weekend. The December contract notched its low for the dayat $2.755 in the first hour of trading before bubbling higher tofinish at $2.884, a 5.8-cent advance on the day. Estimated volumewas above-average, with 80,226 contracts changing hands.

Riding a wave of bullish emotion, natural gas futures continuedhigher Friday despite forecasts of warming weather expected thisweek. After checking lower at $3.03, the November contract receiveda steady boost of buying pressure from commercials and speculatorsthat enabled prices to push above $3.10 in the early afternoon. Butjust when it looked as if the prompt month would finish the weeknear its high, a late round of pre-weekend profit-taking droveprices down to settle at $3.072, a net-0.8 cent advance on the day.

Williams share prices slid 5% but then rebounded late last weekand analysts adjusted their earnings forecasts following anannouncement that the company expects third quarter earnings pershare to be “substantially below” current Wall Street estimates of20 cents/share. The company said a change in accounting standardsand cooler than normal temperatures in Southern California, itsmajor power sales area, were to blame. But that’s just half thestory.

BT Alex. Brown analyst Adam Sieminski said he expects U.S. gasprices to average $2.10/MMBtu this year, which is up 15 cents fromhis previous forecast of $1.95/MMBtu, because of rising demand,declining wellhead deliverability and the falling storage surpluscompared to last year. Sieminski said the tightness in marketfundamentals will peak this winter and carry strong prices throughnext year. He raised his forecast for prices in 2000 to $2.40 froma previous estimate of $2.20.

BT Alex. Brown analyst Adam Sieminski said he expects U.S. gasprices to average $2.10/MMBtu this year, which is up 15 cents fromhis previous forecast of $1.95/MMBtu, because of rising demand,declining wellhead deliverability and the falling storage surpluscompared to last year. Sieminski said the tightness in marketfundamentals will peak this winter and carry strong prices throughnext year. He raised his forecast for prices in 2000 to $2.40 froma previous estimate of $2.20.

Many industry analysts have been steadily raising their gasprice forecasts because of the year-long drilling slump and itspotential impact on gas deliverability, but St. Petersburg,FL-based Raymond James &amp Associates went out on a limb last weekpredicting sharp price spikes above $10/Mcf at the Henry Hub nextwinter and an average of $3/Mcf at the hub next year.