Lift

In sympathy with higher crude prices, and as another winter storm approached the Northeast, natural gas futures turned modestly higher in light pre-holiday trading Tuesday. Book squaring was the main feature in the abbreviated session. January closed 3 cents higher at $5.146.

Buoyed by renewed tropical storm concerns and in sympathy with higher crude oil prices, natural gas futures rebounded modestly Wednesday as traders covered shorts and added to their length ahead of the release of fresh storage data Thursday. However, the day’s gains were cast in doubt by a late sell-off following the market’s failure remain above Friday’s $3.25 low. At $3.193 the October contract was nearly a dime off its $3.29 high, but still up 6.1 for the session. Crude gained 48 cents to close at $28.27. Estimated volume in the gas pit was heavy with an estimated 90,435 contracts changing hands.

In some respects the cash market was all over the place Monday, but for the most part the trend was flat to only a few cents higher. The major exceptions on the plus side were gains of about a dime or more for the Columbia-Appalachia (TCO), intra-Alberta, Northern California and San Juan-Bondad markets. But as expected, Rockies prices got hammered by a major outage on Northwest Pipeline.

Like a stunned boxer that twice tries but fails to lift himself off the mat, the natural gas futures market was unable to recover Thursday following the release of storage data from the Energy Information Administration (EIA) showing a larger-than-expected 64 Bcf injection. After dropping a cool 10 cents in 10 minutes following the report, the August contract looked like it might rebound before lunchtime. However, that rally and a similar one in the early afternoon fizzled, leaving prices to sift downward and close just off their lows. At $2.902, the August contract finished with a 14-cent decline for the session.

Like a stunned boxer that twice tries but fails to lift himself off the mat, the natural gas futures market was unable to recover Thursday following the release of storage data from the Energy Information Administration (EIA) showing a larger-than-expected 64 Bcf injection. After dropping a cool 10 cents in 10 minutes following the report, the August contract looked like it might rebound before lunchtime. However, that rally and a similar one in the early afternoon fizzled, leaving prices to sift downward and close just off their lows. At $2.902, the August contract finished with a 14-cent decline for the session.

Despite regional generation capacity additions and a preventative maintenance season, a sustained rally in the oil markets, combined with summer heat, could significantly strengthen power prices this summer, with the greatest impacts seen in such gas-dependent areas as NEPOOL (New England) and the Western Systems Coordinating Council (WSCC), Energy Security Analysis Inc. (ESAI) said in its latest “North American Power Market Watch.”

The party is over, but after three years the chip and punch bowls are still full. The electricity futures contracts on the New York Mercantile Exchange never really attracted a crowd, and Nymex President J. Robert Collins Jr. finally called it quits last Thursday on six electricity contracts: California-Oregon Border, Palo Verde, Cinergy, Entergy, PJM and Mid-Columbia.

Transco will lift the only OFO it has ever issued, a systemwide Imbalance Operational Flow Order to all buyers that took effect Dec. 1 (see Daily GPI, Nov. 30), effective with Friday’s gas day. The order, which had penalties of $25/Dth for daily imbalances of at least 1,000 dekatherms exceeding a 5% tolerance over nominated volumes, was effective in easing operational concerns about system integrity, it said. Upon termination of the OFO, Transco also will return pool scheduling tolerances to 4% and will resume accepting receipt make-up nominations from shippers with negative (i.e., due the pipeline) imbalances.

Despite forecasts calling for moderating temperatures both over the weekend and this week, natural gas futures shuffled higher Friday as speculators and options traders covered short positions. The November contract received the biggest boost at Nymex, rising 10.3 cents to $3.041. In doing so, November notched its first $3.00-plus close since Aug. 23.