Little

Expiration day in the natural gas pit had a little something foreveryone Monday. While bears were greeted yesterday morning by alower open that paved the way for declines to the $1.80 level,aggressive afternoon buying put a smile on bull-traders’ faces asit led the April contract back above Friday’s best levels. But whenall the dust had settled and the final settlement price was handeddown from the data room at Nymex, neither bull nor bear could claimthe see-saw battle as a victory or a defeat. April finished downjust 0.2 cents at $1.852 and the May contract echoed that sentimentclosing 0.2 cents lower to $1.883.

With little in the way of fundamental support to speak of, cashprices still managed gains between a nickel and a dime Tuesday atalmost every trading point. “It’s got to be technical,” said autility buyer. The tone was set by the screen opening around $1.80,a dime higher than Monday’s opening, even though the April contracteventually ended the day with a small net loss, he said. Anothersource thought it was a case of cash starting to converge with thescreen.

Too little, too late was the apt expression for the futuresmarket yesterday, which continued lower despite what someconsidered to be the most constructive fundamentals yet thiswinter. And so the April contract took a page out of the Marchcontract’s playbook, slipping 3.8 cents to $1.659 amid a tight,6-cent trading range. Estimated volume was high for the usuallyquiet day-after expiration with 65,714 contracts changing hands.

Cash prices again showed little movement Thursday. The maindifference from the previous day was that small drops dominatedinstead of small increases. Thursday’s biggest fall of nearly adime came in Transco Zone 6-New York City.

With a little holiday cheer, the American Gas Association handedout an extremely optimistic 1999 gas consumption forecast last weekas a gift to those whose spirits may be down with gas demand thisChristmas season. The association told those attending its year-endreview conference in Washington, D.C. to expect 5% growth inconsumption in 1999, led by a 13% increase in the residentialsector and a 6.8% jump in the commercial sector. This rosy glow,however, would be fueled by normal weather, something that’s beenin short supply over the past year. Given above normal wintertemperatures next year (10% fewer heating degree days) and severalother negative factors such as $10/bbl oil prices, AGA expects an0.4% drop in gas demand.

As bidweek approached the home stretch Thursday, traders foundfixed prices mostly a little higher than they had been Wednesdaybut still considerably below where they had been at the start ofthe week Monday. A marketer whose earliest purchases into PanhandleEastern were in the mid $2.00s said the numbers rebounded to$1.93-94 Thursday after having dipped to just under $1.90Wednesday.

Mississippi River Transmission (MRT) may have jumped the gun abit when it proposed to hold auctions as part of a new method ofawarding capacity to shippers on its pipeline system. But thecompany said it shouldn’t be punished for coming up with the ideaprior to the release of FERC’s Notice of Proposed Rulemaking(NOPR), in which short-term capacity auctions are a major issue.

The market wasted little time retracing Thursday’s losses inactive trading on Friday by gapping higher on the open beforeexploding upward amid growing concerns of more supply disruptionsdue to storms in the Gulf and Atlantic. The October contract spikedas high as $2.35 on a wave of panicked buying early in theafternoon on Friday as traders were already facing supplyinterruptions associated with Tropical Depression 8. However, byearly afternoon traders were shifting their concern to the lessimminent, but potentially more severe Georges still located in theAtlantic. That allowed traders to take profits ahead of the weekendand October to slip lower. October finished up 12.2 cents to $2.26.

Natural gas is second only to the newly established electricitymarket in terms of volatility, and Tuesday it did little to dispelthat notion as the market dipped momentarily, only to spikedramatically higher in the last 90 minutes of trading, leaving eventhe most weathered of bulls surprised by the advance. Octobersettled at $2.132, a 17.8-cent gain for the day and nearly ahalf-dollar above the $1.63 low established less than two weeksago. Estimated volume confirmed the active trading with over120,000 contracts changing hands.