Momentum

Despite record temperatures in a number of regions around the country, August natural gas futures on Tuesday maintained the momentum lower from Monday’s trading session. The prompt month put in a low of $5.520 on the day before settling at $5.555, down 22.8 cents on the day and 79.2 cents lower for the week-to-date.

Maintaining Monday’s momentum, August natural gas on Tuesday climbed to a high of $5.850 before retracing most of its steps in the afternoon. Despite the morning run-up, the prompt month settled at $5.633, up only 2.5 cents from Monday’s close.

Continuing the momentum that began earlier this month, MidAmerican Energy Holdings Co. (MEHC) gained approval Thursday from the California Public Utilities Commission (CPUC) for its proposed $9.4 billion purchase of ScottishPower’s PacifiCorp utility operations.

A recent endorsement of Millennium Pipeline by the New York Public Service Commission (NYPSC) is another indicator of growing momentum for new energy infrastructure to benefit upstate and downstate regions of New York, as well as other Northeast markets, according to pipeline President Dick Leehr. Millennium is still awaiting FERC approval of its amended project application.

With momentum building in all six western states where the utility operates, Utah and Wyoming became the first two states to approve the proposed $9.4 billion purchase of PacifiCorp from ScottishPower by Iowa-based utility holding company MidAmerican Energy Holdings Co., part of billionaire Warren Buffett’s Berkshire Hathaway conglomerate. Utah regulators approved the deal last Friday, and Wyoming’s regulators earlier gave a verbal okay with a final written order to be issued next week, effective Feb. 10.

While the pace of exploration and production (E&P) company mergers and acquisitions (M&A) is expected to remain brisk in 2006, the recent upward credit rating momentum in the sector has been dampened by uses of excess cash flow to buy back stock and pay premium prices for assets and by liberal use of debt leverage to fund M&A, Standard and Poor’s Ratings Service (S&P) said in a new “Industry Report Card: U.S. Oil and Gas.”

January natural gas kept the week’s upward momentum rolling Friday from the get-go. After opening at $13.150, the prompt month climbed slowly until approximately 1 p.m. EST, when it exploded higher to settle at $13.931, up 90.4 cents on the day.

Continuing to ride the downward futures momentum from Thursday, cash points cratered another 15-65 cents on Friday, leaving Henry Hub cash about flat to the screen as of the end of the cash trading session. The vast majority of points were down 20-40 cents. However, natural gas futures then proceeded to follow crude oil higher, ending the day up 18.3 cents to $9.111.

Fueled by heat concerns and an upward revision in projected Atlantic hurricane activity, September natural gas futures kept their upward momentum Tuesday as the contract continued to take out old continuation highs.