Muddled

In an attempt to clarify its muddled policy on gathering, FERC Thursday issued a policy statement that identifies the type of potentially abusive practices by gathering affiliates that would frustrate the agency’s regulation of interstate pipelines enough to justify reassertion of jurisdiction over exempt gathering.

Adding another opinion to the muddled winter forecast scene, Andover, MA-based WSI Corp. said last week that it expects the November-through-January period to average cooler-than-normal temperatures in the major cities of the Northeast and parts of the southern Rockies and Southwest, while warmer-than-normal temperatures are expected across the rest of the northern U.S. and in the Southeast.

Adding another opinion to the muddled winter forecast scene, Andover, MA-based WSI Corp. said Monday that it expects the November-through-January period to average cooler-than-normal temperatures in the major cities of the Northeast and parts of the southern Rockies and Southwest, while warmer-than-normal temperatures are expected across the rest of the northern U.S. and in the Southeast.

After initially ducking lower to equal Monday’s $5.16 low, the June natural gas futures contract struggled higher in featureless trading on its first session as prompt contract Tuesday. It closed at $5.236, up 4.6 cents for the session and 7.6 cents off its early low. Estimated volume was light, with 69,391 contracts changing hands.

Increasingly muddled technicals and fundamentals played to a stalemate Wednesday as natural gas futures traders failed to propel prices very far from the $5.00 mark. At the closing bell, the front months made small advances while the winter 2003/04 strip ebbed slightly. April finished at $5.097, up 2 cents for the session on its penultimate trading day. May, which will take over as prompt month when April goes off the board Thursday, notched a 3-cent gain to close at $5.147.

Having already experienced a wave of long liquidation (Friday) and a short-covering squeeze (Monday), natural gas futures were left without a major price influence on expiration day Tuesday. Modest, market-on-close selling tipped the scales in bears’ favor in the last 30 minutes of trading. The November contract finished at $4.126, down 5 cents for the session, but 23.7 cents higher than the level from which the market began its tenure as prompt month.

Amid muddled fundamentals and a rapidly improving technical situation, natural gas futures reversed direction Wednesday as local traders used Tuesday’s retracement as a springboard to new eight-week highs. A 10.8-cent gain in the September contract was trumped by an 11.3-cent rise in the October contract. The two months, which constitute the end of the seven-month summer strip and storage injection season, finished at $3.274 and $3.339 respectively. The only non-bullish factor Wednesday was estimated volume, which at 95,733 was a little on the low side.

Bulls saved their best for last on Friday. After being held to an extremely-tight, 7-cent trading range throughout much of the session, natural gas futures shot high during the closing 75 minutes of trading in concert with a spike in the nearby crude oil pit. At the closing bell, June natural gas futures were up a modest 4.3 cents or 1% at $4.291. Comparatively, June crude was up an even dollar or a little over 3% at $29.91.

“What we have is basically a two-lane road, and the marketers and everyone else want to use it as a six-lane highway,” Edward Tirello, analyst for Deutsche Banc Alex. Brown, said describing the U.S. power grid. “But someone is going to have to spend a enormous amount of money to [make it happen], and no one is spending any money right now.”