Holiday

Capping another tumultuous trading week, the natural gas futures market tumbled lower on New Year’s Eve in selling surges both before and after the release of bearish storage data featuring a paltry 80 Bcf net withdrawal. Within minutes of the report’s release, the February contract dropped to $6.05 — 90 cents off the spike high carved out less than 24 hours earlier.

Much like in trading for the long holiday weekend, the West showed the greatest relative price strength Tuesday, but even that region succumbed to overall falling numbers. With a natural gas screen dip of 9.2 cents almost lost in a general crash of energy futures and forecasts pointing to a cool September for most of the eastern U.S., prospects for a substantive gas price rally appear remote.

Natural gas futures fell sharply in abbreviated pre-holiday trading Friday as technical selling apparently outweighed concerns over the development of several tropical systems. The October contract finished its second session as prompt month on a negative tone, dropping 21.3 cents to close at $4.731.

Citing high linepack and anticipation of low demand over the holiday weekend, Tennessee issued a systemwide OFO Action Alert effective with the beginning of Friday’s gas day and said it expected the alert to remain in effect through Monday. Its bulletin board posting listed actions that customers under Rate Schedules SA, LMS-PA and LMS-MA could take to avoid penalties.

The swing market emerged from the holiday weekend in a decidedly mixed mood. In the East, prices ranged to 15 cents up or down from flat Tuesday, but showed a pronounced bias to the downside. Western points were considerably more bullish, registering moderate gains in most cases but rebounding about a dollar in San Juan Basin and rising 20 cents or more at a few Rockies points.

El Paso Energy Partners LP. (EPN) said Monday after the holiday weekend that it has completed its $782 million acquisition of the San Juan Basin assets from El Paso Corp.

In a textbook example of why traders eschew short positions heading into a holiday weekend, natural gas futures erupted higher Tuesday, as a combination of fund and local buying drove the market up 9% to match recent highs. After gapping higher at the open, the March contract wasted precious little time yesterday as it moved above its 40-day moving average in the first 10 minutes of trading. Buyers did not once look back, boosting the prompt month to its highest close since Jan. 2, up 19.1 cents at $2.397. At 111,562, heavy estimated volume served to punctuate the price move.

Despite the holiday, storage operators finally opened the floodgates during the first week of the year in response to extremely cold weather, particularly in the Northeast and Southeast. The American Gas Association (AGA) reported a 190 Bcf withdrawal from storage for the week ending Jan. 4, the first withdrawal this season that has exceeded the previous year’s pace.

Despite the holiday, storage operators finally opened the floodgates last week in response to extremely cold weather, particularly in the Northeast and Southeast. The American Gas Association (AGA) reported a 190 Bcf withdrawal from storage, the first withdrawal this season that has exceeded the previous year’s pace. The number far exceeded last year’s 167 Bcf weekly withdrawal and was much bigger than the five-year average for the week of 137 Bcf. But it knocked only a smidgen (23 Bcf) off the year-on-year storage surplus.