Hitting

The most recent of an extended series of quick-hitting blasts of arctic air that has made a shambles of forecasts for a warmer-than-normal February created abundant heating load for Wednesday in northern market areas. The result was cash price gains across the board Tuesday. The return of industrial load from a holiday weekend absence also was a bullish factor.

After running up and hitting the key $8 resistance level late last week, July natural gas futures spiraled lower on Monday, following a well-worn trading pattern of the last few months. The prompt month settled at its low of the day at $7.690, down 22.8 cents from Friday’s close.

In what could be part of the prelims to bigger, harder-hitting fights, Nevada Consumer Advocate Eric Witkoski in March has publicly lashed out at Sierra Pacific Resources’ two utilities, alleging possible shoddy maintenance practices in the north and an excessive general rate increase request in the south. Meanwhile, the Nevada Public Utilities Commission (PUC) that regulates the utilities has been mostly quiet.

With temperatures hitting record lows statewide, Sempra Energy’s two utilities covering the southern half of California reported Tuesday sending out substantially larger amounts of natural gas to residential and small business customers over the three-day Martin Luther King holiday weekend. Both Southern California Gas Co. and San Diego Gas and Electric Co. expect demand for January to be more than 20% higher than the same month a year ago.

Natural gas futures continued their range-bound dance Monday as May natural gas tested the upper limits of the recent $6.65 to $7.65 trading range. After hitting a high of $7.630 late in the afternoon, the prompt month went on to settle at $7.577, up 44.2 cents on the day.

After hitting its head on a high of $7.630 to begin the week on Monday, May natural gas explored the lower boundaries of its recent range to finish the week Friday. After recording a low of $6.670, the prompt month settled at $6.743, down 22.9 cents on the day and 46.7 cents lower for the week.

According to the American Gas Association (AGA), the country’s gas reserves grew by about 4 Tcf last year to 197 Tcf, hitting levels not seen since 1984. The AGA estimate is based on results reported by 30 large reserves holders, which represent about half of U.S. reserves.

Hitting the comeback trail, El Paso Corp. reported Tuesday its year-end 2005 proved natural gas and oil reserves totaled 2.7 Tcfe, up 22% from 2004. The total included El Paso’s share of proved reserves in Four Star Oil & Gas Co. During 2005, El Paso’s exploration and production (E&P) capital expenditures totaled $1.867 billion, and reserve replacement costs were estimated to be $2.36/Mcfe.

After hitting their head on resistance at the $14.490 level in the overnight Access trading session, January natural gas futures opened Tuesday’s regular session at $13.950. Following tests in both directions during the regular session, the prompt month ended up settling near flat at $14.080, up just 3.7 cents from Monday’s close.