Impetus

June natural gas futures crashed hard to finish the week, which casts doubt on the impetus behind the rally of the last two weeks. Some traders said the swift retreat shows that the rally was less driven by fundamentals and more fund-driven, which calls into question the reports during the week of the sizeable open interest position held by the United States Natural Gas Fund (UNG). Front-month natural gas closed at $4.098 on Friday, down 19.4 cents from Thursday and 21.3 cents lower than the previous week’s finish.

A $7.50/Mcf natural gas price in 2010 would provide the economic impetus to lift drilling activity enough to maintain market balance, even with an anticipated 20% decline in oilfield service price deflation, SunTrust Robinson Humphrey (STRH) energy analysts said last week.

A $7.50/Mcf natural gas price in 2010 would provide the economic impetus to lift drilling activity enough to maintain market balance, even with an anticipated 20% decline in oilfield service price deflation, SunTrust Robinson Humphrey (STRH) energy analysts said Thursday.

July natural gas futures retreated Monday as much of the impetus for higher prices in play last week — forecast hot weather and soaring oil prices — dissipated. July dropped 8.9 cents to $12.604 and August dropped 7.9 cents to $12.684. July crude oil fell $4.19 to $134.35.

Controversy over liquefied natural gas (LNG) terminal proposals in Oregon is one impetus behind a Congressional move Monday to rescind FERC’s jurisdiction over LNG facility siting. Gov. Ted Kulongoski has lawyers looking at the state’s rights to withhold permits for federally approved projects with which Oregon disagrees.

Sources agreed that Thursday’s 21.7-cent increase by June futures was the chief impetus for rising cash prices at most points Friday. The return of colder weather in upstate New York and New England, along with storage injection demand, also played a part in the overall firmness.

With Monday’s 78.5-cent futures spike (and a further sizeable screen increase early Tuesday) giving added impetus to the cash market’s reawakened bullishness based on new forecasts of widespread cold weather later in the week, spot gas quotes realized even larger gains Tuesday than they had the day before in most cases.

The announced resignation of Interior Secretary Gale Norton has given opponents of drilling off Florida’s coastline added impetus to stop the Bush administration’s proposal to open up more of the eastern Gulf of Mexico to oil and natural gas leasing, said offshore drilling foe Sen. Bill Nelson (D-FL) on Monday.

The removal of investment restrictions when the Public Utility Holding Company Act of 1935 (PUHCA) is officially repealed in February must not “become a new impetus or justification for continuing the era of adversarial relationships between the utility sector and state or federal regulators,” David Sokol, chairman of MidAmerican Energy Holdings Co., said last Tuesday. “It absolutely is past time for all of us to work together to meet tomorrow’s challenges in this sector.”