Fundamentals

With gas prices tumbling fast and fundamentals decidedly bearish, producers have scrambled to lock in the highest wholesale rates available. Among others, Fort Worth-based independent XTO Energy Inc. said last week it has hedged 90% of its production through March 2002 at $4.30/MMBtu and has hedged 200 MMcf/d at $3.72 for the last three quarters of 2002. XTO is one among many independents who have touted their foresight in locking long-term rates when prices were considerably higher.

With gas prices tumbling fast and fundamentals decidedly bearish, producers have scrambled to lock in the highest wholesale rates available. Fort Worth-based XTO Energy Inc. said Monday it has hedged 90% of its production through March 2002 at $4.30/MMBtu and has hedged 200 MMcf/d at $3.72 for the last three quarters of 2002. XTO is one among many independents who have touted their foresight in locking long-term rates when prices were considerably higher.

Extending Friday’s losses, natural gas futures continued lower yesterday, as traders were greeted back from the weekend to a trading landscape devoid of anything resembling bullish news. Prices wasted little time in reflecting the negative sentiment, gapping lower at the open for the second session in a row before finding support just above the $3.00 level. The August contract notched its lowest closing price since May of 2000, slipping 18.2 cents to $3.068.

Weekend prices bowed under the weight of the umpteenth huge weekly storage injection report and generally mild weather in the key Midwest and Northeast market areas. Despite reports of air conditioning load starting to pick up to near-normal summer levels in the South and Midcontinent, quotes declined between a nickel and 20 cents at most points, with much bigger plunges seen in California.

After climbing to its highest level since May 24, natural gas futures were sent spiraling lower Tuesday as traders weighed the impact of continued mild weather and an increasingly bearish storage situation. The prompt July contract took the selling squarely on the chin, tumbling 17.7 cents to close at $3.892. The remaining summer strip did not fair much better, closing 17.4 cents lower at $3.984.

All of the leading indicators for offshore construction activity point to “much higher levels of pipelay, derrick and diving activity,” and underlying fundamentals driving the offshore construction industry continue to be “very robust,” according to Raymond James Energy’s “Stat of the Week” for last week.

All of the leading indicators for offshore construction activity point to “much higher levels of pipelay, derrick and diving activity,” and underlying fundamentals driving the offshore construction industry continue to be “very robust,” according to Raymond James Energy “Stat of the Week.”

After failing to fill in a looming chart gap on the daily chartsduring Sunday night’s Access trading session, natural gas futuressank lower for much of the session Monday, as day traders rotatedto the short side of the market. That selling pressure enabled theFebruary contract to trim all of Sunday’s advances, finishing 0.2cents down on the day at $7.457.

Although fundamentals seemed to be ignored in Tuesday’s mostlysofter market, traders apparently got a wake-up call Wednesday tothe fact that temperatures remained near or below freezing innearly all areas outside the desert Southwest and were expected tostay that way through the end of 2000. The result was largeWednesday advances at nearly all pricing points, with a few gainsexceeding a dollar.