Hard

Prices spiked by 30-70 cents or so Tuesday even as some traders found it hard to rationalize the market’s strength. They could identify chilly weather in some regions, especially in much of the West, and even noted that much of Texas is hot enough to experience decent air conditioning load.

Another Friday, another price rout. In a seeming rerun from a week earlier, weekend prices tanked hard Friday in response to lack of weather-related load and a bearish storage report in which the 81 Bcf injection exceeded most prior expectations.

Investors still don’t believe that higher oil and natural gas prices are sustainable, and they have yet to appreciate the enormous shift in wealth currently flowing in the energy sector, according to Raymond James’ Stat of the Week. However, over the next decade, analysts are forecasting a long-term sector rotation into energy stocks, because the fundamentals are “very bullish” relative to the overall market.

Although Sen. Pete Domenici (R-NM) “has worked hard to draft a coherent energy bill,” the stalled Senate energy measure in its current form needs to be “flushed,” Questar Corp. Chairman Keith O. Rattie said last Wednesday.

Although Sen. Pete Domenici “has worked hard to draft a coherent energy bill,” the stalled Senate energy measure in its current form needs to be “flushed,” Questar Corp. Chairman Keith O. Rattie said Wednesday.

Coming down hard and crushing the psychological $6 mark to start the week of trading, August natural gas futures plummeted 28.4 cents to close at $5.857. The crash notched the lowest level August has seen since April 26, when the contract bounced off of the $5.80 level on the day.

Reliance on natural gas is a steadily escalating source of financial pain for oilsands complexes. Alberta’s three oilsands mining and bitumen upgrading complexes spent a total of C$692 million (US$520 million) on gas in 2003, or five times what they spent in 1999, according to the Calgary energy investment firm of Peters & Co. Ltd.

With some of the new-found air conditioning load that had helped support prices at midweek starting to fade again and chilly weather in the Rockies and north-central U.S. moderating from the other direction, cash quotes ranged from flat to down a little more than a dime at nearly all points Friday. The slump in industrial demand typically associated with a weekend also contributed to the generally mild bullishness.

Tuesday’s across-the-board spikes in swing prices for the last day of 2003 had some traders, especially in the East, scrambling to find drastically revised weather forecasts that would help justify such a run-up. While there is a more ominous forecast for the eastern half of the country next week, most near-term predictions still indicated that unseasonably moderate temperatures would continue to prevail in the eastern two-thirds of the U.S. into the long holiday weekend.