Higher

Those of a bullish bent found encouragement all around Tuesday:July natural gas futures challenged unprecedented heights whilecrude oil futures edged back above $32/bbl; heat waves challengedelectric grid operators in both the East and West; and priorestimates of this afternoon’s storage report indicated a consensusthat the year-on-year deficit will just keep growing and adding tothe refill challenge.

After Wednesday’s 9.8-cent gain following what was construed asa bullish report on gas storage levels, futures rallied yesterdaywith July posting a 20.7-cent gain to a new contract high of$4.463, which was 1.7 cents off its daily high of $4.480.

After a brief foray in negative territory, natural gas futuresbubbled higher yesterday, preserving bulls’ 6-day and countingstring of price advances. With yesterday’s 4.2-cent rise, the Junecontract has climbed almost 40 cents from $3.01 lows notched on May5. June closed at $3.396.

Completing its quietest last-three-day settlement period inrecent history, natural gas futures moved higher early yesterdayonly to drift lower throughout the afternoon as traders lightenedtheir long exposures. The expiring May contract finished 2.1 centslower at $3.089, but for many the real story was the rest of thesummer strip which slipped an average of 2.9 cents. Estimatedvolume was light for an expiration day with only 90,843 contractschanging hands.

Texas Eastern plans minor maintenance for a few hours Thursdaymorning at the Grand Chenier (LA) Station. Operators may experiencehigher than normal pressures on the West Louisiana zone’s CameronSystem, but pressures are expected to return to normal by evening.

KeySpan Energy announced that its earnings are significantlyahead of analysts’ estimates for the first quarter and could be upto 7% higher for calendar year 2000. The First Call averageestimate is currently $1.87 per share for the year 2000, thecompany said. The boost has been caused by many factors Keyspansaid including: Strong growth in our gas market, resulting from anaggressive market strategy in the Company’s new Long Island market;Electric demand and gas demand hit record levels in January, givingKeySpan highest winter send-out days in both electricity and gas;and the benefit of substantial reductions in O&M expenses,amounting to $110 million. In merger-related news, KeySpan saidthat the merger with Eastern Enterprises, which was announced lastyear, is proceeding on schedule and is expected to be completed bythe Fall.

Feeding off Wednesday’s strong close, natural gas futures spikedhigher yesterday morning, but ultimately finished lower in anextremely quiet session. After notching a new life of contract highat $2.90 shortly before noon (EST), April was hit with light profittaking which demoted the contract to $2.851, a 1.5-cent loss forthe session.

Although a recent rate case settlement allowed PG&E to raiseits distribution rates, the hike will not translate into higherbills for customers. The utility said its revised gas tarifffiling, which the California Public Utilities Commission yesterday,will actually reduce overall residential gas rates by 3.1%.

Once again all of the “hot” price action Friday occurred in theNortheast, and that’s because it was downright bone-chilling there.This time it was the turn of Algonquin citygates to occupy the toprung of the pricing ladder as they ran up more than $1.00 into the$4.80s and peaked at $6.50. A large aggregator said she later heardintra-day citygates trading as high as $8. She and another sourcesaid Algonquin was curtailing all IT and 50% of Secondary Firmservice downstream of the Cromwell (CT) Compressor Station Fridayand cutting Secondary Firm to zero past Cromwell for Saturday. Thataffected all deliveries to Boston, Rhode Island and the easternhalf of Connecticut, one said.