Future

While the Gas Research Institute maintains the most likelyfuture for natural gas includes low prices and a 31 Tcf market by2015, it is hedging its bets with a new study examining the outcomeif not all the expected pieces fall into place.

Electronic trading may be the antidote to anemic trading of theNew York Mercantile Exchange’s Alberta and Permian Basin gasfutures contracts, Exchange President R. Patrick Thompson said lastweek.

CNG Transmission Corp. last week called on FERC to dismiss thepending application of potential competitor Independence Pipeline,claiming that the 400-mile project was based on out-dated andfaulty demand projections for the Northeast gas market and lackedbinding precedent agreements. In addition, it said Independence hasdrawn “substantial opposition” from affected landowners andenvironmental groups.

Despite the increasing pressure of retail competition, thefuture is bright for gas utilities, American Gas AssociationChairman Dick Terry told investors last week. Terry, who also isCEO of Chicago-based Peoples Energy, told the New York Society ofSecurity Analysts he’s optimistic that federal and state regulatorsare headed in the right direction.

The Commodity Futures Trading Commission (CFTC) last weekapproved a New York Mercantile Exchange (NYMEX) application totrade electricity futures and options based on delivery at thePennsylvania-New Jersey-Maryland (PJM) western hub. And slated forapproval today is the proposed and competing Chicago Board of Trade(CBOT) PJM western hub electricity futures contract.

Yet another gas futures contract could be coming down the pipe,this time in Chicago where a bounty of Canadian gas expected fromNorthern Border and Alliance Pipeline has Peoples Gas Light &ampCoke thinking its system could host the contract’s delivery point.

The bounty of Canadian gas expected to make its way to Chicagovia Northern Border and Alliance Pipeline has Peoples Gas Light& Coke thinking its system could host the delivery point foryet another gas futures contract.

Futures traders are always looking to historical price patternsto predict future trends, but last week they were particularlyfocused on the last 40 trading days and the average of thosesettlement prices. Referred to as the 40-day, the prompt month’s40-day moving average has been an increasingly important indicatorfor those looking to predict a price move in the market. But boththe magnitude and duration of those swings have decreased in thepast several weeks, leading traders to hypothesize some of thedynamics in the market could be changing. Some of those changeshave been evidenced by the December contract’s inability to sustaina move much above or below the 40-day moving average in recentweeks. And last Friday was no different when the December contractrebounded 6.5 cents to settle at $2.459, just 1.4 cents below the40-day.

With all the talk of competition coming to the electricindustry, the gas industry could be feeling like a stepchild.According to speakers last week at the fourth annual meeting of theGas Industry Standards Board (GISB) in San Antonio, gas unbundlingis anything but a done deal, and many questions remain.