Momentum

After more than a $1 drop Monday and Tuesday, downward momentum in gas futures finally dissipated on Wednesday. In the morning it even appeared that the April contract was going to hold above $6, but bulls’ hopes were quickly dashed and the near-month contract ended the day down another 7.9 cents to $5.865, a far cry from the $8.50 high only eight trading days ago. The high for the day Wednesday was $6.115 but the low was $5.760.

Pulled higher by the momentum in the futures market and some lingering effects of the 2.1 Bcf/d in temporary production curtailments in the Gulf of Mexico late last week because of formerly Tropical Storm Hanna, cash prices bounded 10-20 cents higher Monday and ended on a relatively strong note at most locations outside the Rockies.

Gathering momentum as the trading session wore on Thursday, natural gas futures extended to new six-week highs as traders were forced to grapple with the bullish one-two combination of strength in the crude oil market and a lower-than-expected 53 Bcf storage injection for the week ending Aug. 9. The September and October contracts caught the biggest updraft from the buying, each gaining 21.7 cents to close at $3.127 and $3.172 respectively. At 139,856, volume for all the contracts in the gas pit was heavy and served to punctuate the price move.

Primarily building on upward momentum from the day before and an initially higher screen, the cash market continued to push higher Wednesday with gains that were mostly within a few cents on either side of 20 cents but tended to be greater in the Rockies.

A Nor’easter dumped snow from D.C. to Boston yesterday, fuelingthe bullish momentum in the gas futures pit. It also forced Nymexto close up shop an hour early and plan for a one-hour delayedopening today.

Spot prices at the Southern California border yesterday lostmomentum and fell back into the atmosphere at around $20/MMBtuafter holding early in the ethereal region above $40. The winterstorm that rocked the state earlier in the week moved eastward andthe initial shock of SoCalGas’ 90% balancing requirement, whichgoes into effect today in response to low storage levels, seemed tobe wearing off a little.

Hoping to reverse the momentum of adverse court and regulatoryactions that have pushed it to the brink of bankruptcy, SouthernCalifornia Edison Monday won a U.S. District Court lawsuit againststate regulators, upholding the utility’s right to recoverreasonable costs for purchasing power.

Momentum may have appeared just in time last week forCalifornia’s sluggish power plant siting system with stateapprovals on short- and long-term electricity capacity additionsand the prospects for putting another 2,000-plus MW in play by theend of February

Boosted by the momentum gained through the 1980s and 1990s withgrowing regional wholesale electricity trading markets inCalifornia, New York, Pennsylvania, New Jersey, Maryland and theNew England states, more U.S. regions now are open to electricitycompetition, according to a report by the Energy InformationAdministration.