Gas gatherers and processors won a major victory when OklahomaGov. Frank Keating vetoed Senate Bill 319 last Friday. Thelegislation would have given the Oklahoma Corporation Commissionbroad authority to regulate rates, terms and conditions ofgathering and processing contracts and to settle disputes betweengatherers and producers.
Articles from Friday
The June Nymex contract may have only slipped a mere 1.9 centsto $2.202 on Friday, but that small price change may loom verylarge indeed. By virtue of not settling above $2.22, “we’ve takenout and settled below the up trendline, establishing at least ashort term downtrend, if not a sideways trading range,” said TomSaal, Vice-President of Pioneer Futures in Miami. “I think themarket rode up to $2.70 because of speculative buying, and also onthe expectations of a hotter summer. Well, we haven’t met thoseexpectations yet, and now the market has tumbled back down,” hesaid.
Starting Friday, about 90,000 gas consumers in 165 Nebraskacommunities served by KN Energy will begin two weeks of shoppingfor alternative suppliers. Three suppliers have signed up for theone-year pilot, including KN’s unregulated energy services arm,Brighton, CO-based United Gas Service, and Public Alliance forCommunity Energy, an organization of 33 municipalities based inLincoln, NB. KN, the regulated utility, will serve as the defaultsupplier. Supply and transportation services will remain on asingle bill mailed by KN.
Cash prices returned to a climbing mode Friday, and in theprocess won more converts to believing in a fundamentally stronggas market this spring and summer. Although Western gains tended tolag a bit behind, most increases were between a nickel and a dime.Most of the double-digit gains occurred in the Gulf Coast,Appalachian and Northeast market areas.
The April Nymex contract gained 3.7 cents to settle Friday at$2.321, thanks to what one broker called strong fund buying.However, April may be hard pressed to add much more to that.According to the latest Commitments of Traders report,non-commercials extended their net long position by 7,649 contractsto 9,543 during the last two weeks. The broker estimates that 60%of those positions are in April, which would mean these speculatorswould have to wind out of approximately 5,700 April contractswithin the next four weeks. However, if April breaks out of itsrecent technical trading range within the next several days, it islikely funds will add to their overall long position, meaning moreselling pressure would mount on April and May as we approach theApril expiration, a source argued.
In a “Freddie Krueger-style” wipeout, a federal district courton Friday the 13th dealt a crippling blow to a major producergroup and two producers when it denied their motions dealing withroyalty treatment of take-or-pay settlement payments. U.S. DistrictCourt Judge Royce Lamberth upheld his earlier ruling that theIndependent Petroleum Association of America (IPAA) lackedjurisdiction in a lawsuit challenging the Interior Department’scollection of royalties on lump-sum payments made by producers toget out of their gas contracts with pipelines. The IPAA lawsuit ledto a 1996 ruling by the D.C. Circuit Court of Appeals in favor ofgas producers
The March Nymex futures contract fell another 1.9 cents to$2.198 Friday, as traders continued the falloff in prices theystarted on Thursday. “This was not a case of traders gunning forstops, where they try to push the contract under support hoping thecontract will fall even more. This was simply an extension ofThursday,” a broker said.