Might

A writer of detective fiction might call it The Mystery of the Unsupported Bullishness. Even with the typical lower demand of a weekend added to other negative fundamental influences arguing for lower gas prices, most of the cash market continued to achieve small advances Friday.

In what might have been a bit of “irrational exuberance,” natural gas futures shot higher Wednesday following Federal Reserve Chairman Alan Greenspan’s testimony before the Joint Economic Committee in which he expressed concern over high natural gas prices and tight supplies. Local traders led the rally at Nymex, which propelled the June contract to a $6.33 early afternoon high. Although light profit-taking was seen ahead of the close, the losses were minimal, leaving June to finish with an impressive 14.2-cent gain at $6.198.

Noting that some participants in the energy sector might consider his group to be the “perpetual natural gas bulls,” Raymond James & Assoc. analyst Marshall Adkins said the market has proven that “we have, in fact, been overly bearish.” Citing the summer gas storage re-fill problem, Adkins said that Raymond James is once again upping its 2003 gas price forecast from $5/Mcf to $6/Mcf.

Noting that some participants in the energy sector might consider his group to be the “perpetual natural gas bulls,” Raymond James & Assoc. analyst Marshall Adkins said the market has once again proven that “we have, in fact, been overly bearish.” Citing the summer gas storage re-fill problem, Adkins said that Raymond James is once again upping its 2003 gas price forecast from $5/Mcf to $6/Mcf.

After tumbling $3.42 from their $8.50 high on Feb. 28 with only one up-day, April futures finally found a bottom at $5.08 and bounced higher. The contract appeared to be headed for another large drop on Friday morning, opening the day with a sharp move to the downside. But at about 10:40 a.m. buying suddenly kicked in on oversold conditions and by the end of the day, April was up 6.9 cents at $5.430, not far from its daily high of $5.480.

As it had warned might be necessary (see Daily GPI, Feb. 26), Transco said a systemwide Imbalance OFO will take effect with the start of Thursday’s gas day. Limits on imbalance delivery make-up nominations and pooling point tolerances remain in effect until further notice. The OFO limits negative daily imbalances to 5%. Positive imbalances are not subject to OFO provisions.

Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate Energy and Natural Resources Committee, signaled Tuesday he will block the Republican nominee for a seat on the Federal Energy Regulatory Commission unless the White House names a Democratic nominee for the other vacant position on the five-member Commission.

Just looking at Wednesday’s price movements in a geographic vacuum, one might assume it was the West that had a monopoly on cold weather and that conditions were fairly balmy back east. That would be an inaccurate assumption, but it was Rockies/San Juan points recording substantial gains of up to about 80 cents (Cheyenne Hub) while eastern markets were mixed but mostly lower, led by plunges of about half a dollar at some Northeast citygates.

If prices hadn’t been so abnormally high to begin with, it might have been considered a market meltdown. As it was, prices registered steep declines Friday that reached triple digits in the Northeast and at several other points. Rockies, Pacific Northwest and California quotes tended to see the smallest losses of 30-50 cents; otherwise it was rare for any point to fall by less than 60 cents.