Local

Natural gas futures made it three in a row yesterday when acombination of commercial short covering and local buy-stop huntingboosted the contract to its highest level since last week. In doingso, the prompt contract was able to fill in a chart gap createdbetween Friday’s $2.283 low and Monday’s $2.26 high. July finishedat $2.295, up 3.1 on the day.

The futures market continued higher Wednesday in another quiettrading session where local buying was too much for scale-up tradeselling. But despite its 2.6 cent advance to finish at $2.264, theJuly contract fell short of filling in the chart gap up to Friday’s$2.283 low. Estimated volume was a relatively light 56,980.

A survey released yesterday by the American Gas Association of69 gas local distribution companies shows LDCs last winter made ashift to more short-term gas supply contracts. The percentage ofpeak-day gas purchases made under long-term supply agreementsdeclined to 35% in winter 1998-99 from 38% in winter 1997-98, andthe percentage of LDCs with more than half of their peak-daypurchases under long-term arrangements dropped to 38% from 47%during the previous winter. Spot market purchases accounted for 10%of peak-day supplies on average compared to only 5% during theprior winter, AGA said. Storage deliveries comprised 41% ofpeak-day gas supplies.

Lower costs and the opportunity to control their own supply arestill the main drivers of industrial bypass of local distributioncompanies, the energy manager for U.S. Gypsum told state regulatorsyesterday.

Like producers, local distribution companies are under the weather, too, judging by their year-end results. “It’s dismal,” said Merrill Lynch analyst Rebecca Followill, who follows LDCs.

Yankee Gas Services Co. the local distribution arm of YankeeEnergy System Inc., has reached an agreement for TransCanada GasServices Inc. (TCGS) to supply gas, pipeline capacity and storageoptimization for three years. Yankee Gas is the largest LDC inConnecticut, delivering more than 50 Bcf of gas annually to 68communities and 183,000 customers.

Yankee Gas Services Co. the local distribution arm of YankeeEnergy System Inc., has reached an agreement for TransCanada GasServices Inc. (TCGS) to supply gas, pipeline capacity and storageoptimization for three years. Yankee Gas is the largest LDC inConnecticut, delivering more than 50 Bcf of gas annually to 68communities and 183,000 customers.

The futures market continued its rally on Friday, fed on asteady diet of short-covering and local buying ahead of the holidayweekend. Early gains posted by the October contract led to a quickspike to the $1.86 level before light position squaring trimmedadvances before the closing bell. That left the prompt contract upa respectable 7.1 cents to settle at $1.783. October was not alone,November and December each more than matched October’s gains,increasing 7.6 cents and 7.3 cents, respectively.

Duke Energy Trading and Marketing, L.L.C. (DETM) continued itsstrategy of allying with local direct marketing and energycompanies as a way of tackling the retail market by entering intoan energy management and marketing agreement with United GasManagement of Pittsburgh. DETM plans to support United inaggregating residential natural gas customers in selected areas ofthe country.