Lion

Choosing to expire much more like a lion than a lamb, April natural gas futures caught fire in Tuesday afternoon trading, jumping up to reach a high of $7.40 before expiring at $7.323, up 32.4 cents on the day.

After blasting to a price level not seen in the nearly 13-year trading history of natural gas futures, the March 2003 contract sifted lower Tuesday in another session marked by hyper-volatility and 20+ cent bid-ask spreads. March futures closed at $9.577, up 44 cents for the day, but down almost $2.50 from its new all-time high at $11.899.

FERC last Wednesday gave its stamp of approval to the lion’s share of a proposal made by New England Power Pool (NEPOOL) and ISO New England that will set up a standard market design (SMD) for the New England region and, more broadly, help to standardize regional wholesale power markets both across the northeast and the rest of the United States.

Continuing on a trek to grab the lion’s share of the energyservices market, two subsidiaries of Enron Corp. yesterday inkedfinancial deals, totaling more than $1 billion that capitalize onthe Houston-based company’s energy management expertise and growthin the global risk market.

The March swing market continued to roar in like a lionWednesday, and it appeared that many traders are betting it won’tturn into a lamb between now and the end of the month.

It was in like a lion and out like a lamb for March’s debut asthe spot month Friday as traders took the contract higher at theopening bell only to deliver it lower throughout the rest of thesession. March finished down 1.7 cents at $2.532.

While natural gas has captured the lion’s share of the expandingcogeneration market in recent years, “the phenomenal growth of[cogeneration in] the past was a one-time event resulting from aunique combination of regulatory and market changes,” according tothe Gas Research Institute’s Marie Lihn.

As the winter that wasn’t winds down, gas in storage will haveto come out like a lion during March if capacity holders are tomeet cycling requirements. Even if temperatures remain warmer thannormal the market should expect six weeks of relatively strongwithdrawals because many storage capacity owners must bring levelsdown to about 25% full.

Traders put bearish fundamentals aside yesterday at the New YorkMercantile exchange when short-covering and some constructive dailychart features helped the expiring February contract spike higherin active trading. Estimated volume was high, with 134,852contracts changing hands. But despite February’s dramatic 9.6-centadvance to settle at $1.810, many doubt that the market will beable to hold on to those gains when the March contract makes itsdebut today as the prompt month.