Lived

As predicted, the latest spate of cold weather is proving to be short-lived, resulting in mixed price movement Thursday that was slightly weighted to the downside. Many points were less than a nickel up or down from flat.

Last week’s sole rally on Thursday proved to be short-lived as a bearish mood returned to the market Friday. Most points fell anywhere from 2-3 cents to half a dollar Friday as a prior-day gain of 21.6 cents by November futures proved no match for weekend warming trends in the South and Northeast and the usual decline of industrial load over a weekend in vying for cash price influence.

Reduced cooling load due to cold fronts in both the Northeast and Midwest Thursday made Tuesday’s overall rally a short-lived one. Prices fell at most points Wednesday, generally by moderate amounts in the East but by larger amounts in the West.

Unlike the recent past when penetration of the $6 level has been short-lived, March natural gas futures on Friday instead appeared to be fairly comfortable trading in the high $5.90s. Whether the prompt month can stay below $6 following the long holiday weekend is another question entirely.

Gas futures prices soared 38.9 cents Friday to $5.108 and most cash prices rose 5-15 cents on average in response to preliminary indications of Gulf Coast region infrastructure damage from Hurricane Ivan, which as of Friday had forced the shut-in of a cumulative 23 Bcf of Gulf of Mexico gas production, according to the Minerals Management Service (MMS). Late Friday MMS reported four production platforms missing and presumed sunk, others damaged, three pipeline leaks and five drilling units adrift.

Any concerns over worldwide gas supply availability probably will be short lived in light of the large number of natural gas liquefaction projects being planned. According to a report released last week by Arlington, VA-based consulting firm Energy Ventures Analysis (EVA), there are a total of 63 liquefaction facilities proposed worldwide and based on EVA’s assessment, at least 41 of them, totaling more than 30 Bcf/d of LNG supply, are likely to be built.

Unocal Corp. agreed over the weekend to sell Forest Oil Corp. 70 of its offshore Gulf of Mexico (GOM) and onshore Louisiana properties for $295 million. As of July 1, the 273,000 net acres held approximately 34 MMboe in reserves, with net production of 18,000 boe/d.

After dropping to a new two-week low on the heels of another in a string of bearish storage figures (95 Bcf injection), the natural gas futures market rebounded vigorously Thursday as traders continued to take a bullish view on the technical outlook. On its first day as prompt contract at Nymex, July futures finished 5 cents higher $6.066.

Bullied by sudden and seldom-seen agreement between private and governmental weather forecasting agencies, natural gas futures spiked higher Wednesday evening and Thursday as traders initiated long positions they had liquidated over the past several weeks. Nymex reopened with a bang at 7 p.m. EST Wednesday evening as prices rebounded more than a dime off Tuesday’s $4.789 close.