Holiday

Adding to pre-holiday losses notched last Wednesday, natural gas futures gapped lower at the open bell Monday as traders learned that the bearish combination of storage and weather is unchanged from last week. However, after plumbing a $2.61 low shortly after the open, the December contract shuffled higher yesterday to retake a portion of its earlier losses. The prompt month finished at $2.696 down 11.7 cents for the session, but up 8.6 cents from its low Monday.

The July Fourth holiday only delayed by a day the inevitable whiplash that gas futures typically cause on Wednesdays. Thursday opened with bang as August futures gapped about 8 cents higher at the opening bell, but the contract proceeded to do a nosedive in anticipation of another large storage refill. When the American Gas Association reported the ninth 100+ Bcf storage injection in 10 weeks (105 Bcf), futures plummeted to a new low of $3.040. However, the contract encountered surprising support there and managed to rebound to $3.136, down only 6.5 cents for the day.

Florida Gas Transmission did not extend Tuesday’s Overage Alert Day notice into the Fourth of July holiday.

With a holiday weekend spent mulling sub-$4.00 natural gas under their belts, traders at the New York Mercantile Exchange wasted little time taking the June contract for one last ride lower Tuesday, as they demoted the prompt month through several levels of support. By virtue of its $3.738 final closing price, the June contract limped off the board with a 23.5-cent loss for the day, resting a whopping $1.203 lower than where it was when it began its tenure as prompt contract at Nymex a month ago.

Northwest plans to allocate interruptible injections into the Jackson Prairie storage facility as needed over the holiday weekend, saying expected warm weather in the Pacific Northwest could cause injection nominations to exceed Jackson Prairie capacity. Northwest anticipates that the facility’s total capacity may be needed to meet SGS-2F requests and the pipeline’s own balancing requirements.

California legislators and regulators returned to work after the Easter holiday with a full plate of actions pending in the state’s electricity crisis, including the implementation of last week’s agreement between the governor and Southern California Edison Co. Meanwhile, the negative fallout from the utilities’ credit-worthiness problems continues to add pressure for faster state action.

A potential Sonat shut-in of gas behind Toca, LA processingfacilities over the holiday weekend (see Daily GPI, Jan. 16) was averted. Repairs werecompleted at Enterprise’s Toca II plant and it resumed operationsSaturday evening, the pipeline said. That means bothEnterprise-operated facilities and the Western-operated plant “are nowprocessing all of the gas upstream of the plants based on theirrespective commercial arrangements,” Sonat added. It encouraged “allparties to maintain arrangements that will keep the processing plantsoperating at the level necessary to process all gas upstream of Toca.”

Another Canadian takeover bid by Hunt Oil and a snap decisionduring the holiday season by the National Energy Board, highlightthe industry’s eagerness to take advantage of soaring gas marketswith new Canadian supplies.

Niagara Mohawk Power customers and marketers got an earlyholiday present this month, when Tennessee Gas Pipeline beganservice Dec. 1 on the direct connection from its 200 Line nearCedar Hill, NY to the gas distribution system of Niagara MohawkPower near Albany. The new 2.7-mile lateral has the capacity tosupply the proposed Bethlehem Energy Center being developed nearthe connection site. Stephen C. Beasley, president of TennesseeGas, said the connection offers a “variety of new opportunities forshippers on Tennessee,” and will eliminate rate stacking of coststhrough multiple pipelines.