Lower

KN Energy warned investors yesterday warm temperatures, highstorage levels, poor processing margins and reduced gastransportation throughput during the first quarter took a bite outof earnings and could continue to plague the company for the restof the year.

For the second trading session in a row yesterday the Maycontract dipped lower at the open, but was unable to completelyfill in the chart created between last Wednesday’s $2.18 high andThursday’s $2.20 low. And once that early selling pressure driedup, the market was free to rally on waves of buying by both localand commercial traders. The May contract pressed higher throughoutthe session, spiking above the $2.30 level at the closing bellbefore settling at $2.299, a 7.3-cents advance on the day. Atechnical difficulty at Nymex last night suspended the after-hourscomputer-only Access trading session.

Perched at recent highs and just below contract resistance at$2.19, the May contract was poised to continue higher yesterday.And after opening at $2.17 local buying pushed prices to $2.189 inchoppy trading. But despite the bullish euphoria the market hadbefore the open, locals received little help from other marketsegments early yesterday and were forced to cover their longpositions Tuesday afternoon. The resultant sell-off left the promptmonth down 2.5 cents to $2.144.

Technical analysis was originated by Charles Dow in the late1800s as an attempt to interpret recurring historical pricemovements displayed by a group of stocks, which have since evolvedinto today’s Dow Jones Industrial Average. He would have been proudof the natural gas futures market last week. For four days the Maycontract ebbed and flowed within a 10-cent trading range until itbroke higher Friday in a technical buying spree. But as if it werefollowing the same script rehearsed during the prior two tradingdays, the May contract couldn’t hold onto its gains Friday,releasing them in the form of profit taking ahead of the weekend.The May contract capped the week with a 2.7-cent advance to $2.096after notching a $2.15 high.

After gapping 4 cents lower on the open Thursday, the May HenryHub futures contract quickly prompted eager buying as locals andfunds jumped in to take advantage of the downturn. The contractjumped all the way to a new three-month high of $2.090 beforeprofit-taking triggered a sharp retracement. May ended Thursday’sregular session up 2.5 cents from Wednesday’s close.

Aggressively attempting to lower debt before its upcoming mergerwith Seagull Energy, Ocean Energy Inc. sold its Canadian oil andgas division Friday to Quintana Minerals Canada Corp. for $74million. OEI said shareholders for both companies are holdingspecial meetings March 30 to vote on the merger. If they vote infavor, the company will be officially merged that afternoon.

For the second Monday in a row the futures market kicked off theweek with a lower open, which featured bears as the earlyaggressors. That, however, is where the similarities between thetwo weeks ended. Whereas prices continued down the slippery slopelast Monday, yesterday’s trend was almost a straight line higher.Sources said a number of factors-technical short-covering,supportive weather forecasts and even a boost from the nearby crudeoil trading pit-were reasons for the 7-cent gain to $1.769 in Aprilfutures yesterday.

Spirit Energy 76, Unocal Corp.’s U.S. Lower 48 exploration andproduction unit, signed a letter of intent to trade most of itsRocky Mountain oil and gas assets for 5.8 million shares of TomBrown Inc. and $5 million in cash. The total value of the deal wasabout $76 million. Unocal will hold 16.52% of the outstandingcommon stock of Tom Brown based on the number of shares to beissued. The agreement also gives Unocal a seat on Tom Brown’s boardand the option to increase its ownership up to 19.5% through openmarket purchases.

Spirit Energy 76, Unocal Corp.’s U.S. Lower 48 exploration andproduction unit, signed a letter of intent to trade most of itsRocky Mountain oil and gas assets for 5.8 million shares of TomBrown Inc. and $5 million in cash. The total value of the deal isabout $76 million. Unocal will hold 16.52% of the outstandingcommon stock of Tom Brown based on the number of shares to beissued. The agreement also gives Unocal a seat on Tom Brown’s boardand the option to increase its ownership up to 19.5% through openmarket purchases.