Losses

Despite forecasts calling for temperatures to return to normal,natural gas futures continued lower yesterday as traders pressuredprices to new one-month lows. The February contract was the hardesthit, tumbling 36.9 cents to close at $8.103, a hair beneath theJan. 3 low of $8.14. For the second session in a row, the outmonths remained relatively strong as the 12-month strip only sagged14.3 cents to close at $6.339.

It was a no-brainer to predict Thursday’s plunging market. Amajority of price losses were between 80 cents and a dollar, aschilly but seasonally mild weather prevailed in most areas, thescreen continued to go south and traders perceived AGA’s Wednesdayafternoon storage withdrawal report of 167 Bcf as a below-parvolume.

To ease escalating natural gas prices that have resulted inplant shutdowns and job losses, Mexico’s Energy Ministry said lastweek that the government will offer long-term financing through2006 to help industries cope.

It was short but sweet for bulls in Wednesday’sholiday-abbreviated trading session as gas futures rebounded froman early and brief foray into negative territory to notch its 15thgain in 17 trading sessions. Adding to a $2.00-plus price spike offlows etched Oct. 31, December clawed 16.9 cents higher Wednesday toclose at $6.577. Meanwhile January finished up 15.2 cents at $6.584after posting a new all-time commodity high at $6.70.

The Houston Exploration Co. reported it intends to add moreproduction to its hedging program for November and December of thisyear to help off-set losses accrued during the last two quarters.The company plans to add 40,000 MMBtu/d to November hedgedproduction and 50,000 MMBtu/d in December. Houston Explorationhedged these volumes with swap prices averaging $5.10 per MMBtu inNovember and $5.19 per MMBtu in December. The additional hedgingraises the ceiling price from $3.55 to $4.05 on hedged volumes forthe period. The company said it has not committed to any furtherhedges, but is currently evaluating these opportunities as part ofits risk management policy.

Weighed down by misplaced hedges and long term fixed pricecontracts, Beau Canada Exploration Ltd. has sold out to Murphy OilCorp., one of its partners in the development of the hot Ladyfernprospect in northern Alberta and British Columbia, for a totalprice of US$255 million.

Following on the heels of Thursday’s losses, natural gas futuresgapped lower on the open Friday as traders took profits on theirlong positions in sympathy with similar selling in the crude oilpit. October crude finished down 5% on the day at $33.63 per bblwhile October natural gas slipped 2.4% to close at $4.880. OPEC wasscheduled to meet over the weekend in Vienna to discuss possibleproduction increases (check back with http://intelligencepress.comfor breaking news later Monday morning).

Feeding off losses incurred late in the day Monday, natural gasfutures slumped lower on expiration day Tuesday as tradersliquidated longs and rolled positions into back months. TheSeptember contract was the hardest hit, tumbling 6.7 cents to gooff the board at $4.618. In doing so, however, September supplantedJune as the month with the highest final settlement price in thecommodity’s 10-year history.

Natural gas futures continued to defy gravity Friday when a laterally nullified losses achieved earlier in the session. Afterposting an early low of $4.395, September rumbled higher to closeat $4.475 and in doing so, posted a gain for the ninth straightsession. Estimated volume was extremely light, with only 37,841contracts changing hands.