Natural

After gapping lower at the open for the second day in a row,natural gas futures continued to free-fall in lackluster holidaytrading Monday. Weak cash market pricing and a quicklydeteriorating technical picture were cited as reasons for the10.2-cent decline in the November contract. By settling at $2.089,November has dropped over 30 cents in the last three tradingsessions.

Technical factors exert their influence on the natural gasmarket on a daily basis, confounding some traders while rewardingothers. Sometimes technicals are in agreement with underlyingfundamentals as was the case throughout the month of September,when supply tightness met with chart patterns and trend lines thatwere flashing buy signals. The end result: a rally that lifted theOctober contract 40 cents for the month. But, oftentimes thesefactors are not in concert, and trading thus far in October hasbeen just that. Whereas storm-related supply shut-ins supported themarket in September, October has been relatively free of supplydisruptions. That, coupled with U.S. storage inventories nearlyfull, has created an oversupply situation which has weighed onprices most of the month.

Qatargas Liquefied Gas Co. and Duke Energy LNG Sales , a unit ofDuke Energy International, agreed for Duke to buy one cargo ofliquefied natural gas (LNG) from Qatargas.

Where there’s new power generation these days, there usually isnatural gas. And Florida will add almost 11,000 MW of power overthe next eight years, according to a recent report by the state’sutilities. Power demand is soaring in the state, particularly inthe southwestern portion, where currently there are no gaspipelines. That’s going to change soon, however.

Pennsylvania may have blazed the trail for state electricrestructuring, but it’s still floundering in the quagmire ofnatural gas unbundling. A legislative effort started last year byRep. Frank Tulli, Sen. Jeffrey E. Piccola and several other statelawmakers has stalled while stakeholders continue arguing overdetails in workgroups at the state Public Utility Commission andthe governor grapples with a tough decision over the potential lossof $120 million/year in gross receipts taxes.

While neighboring LDC Oklahoma Natural Gas continues its attemptto stave off unbundling, Arkla moved forward last week with acollaborative process involving stakeholders that is intended toproduce a downstream unbundling plan next April with full retailcompetition by October 1999.

Expectations often differ from what actually comes to fruitionin the volatile arena of natural gas futures, and yesterday thatpoint was driven home when a bullish combination of slow-to-resumesupply outages met with a smaller-than-expected storage refill.Traders chased the market higher most of the day, and advances inthe evening computer trading Access session nearly matched theregular pit-trading gains. The November contract received thelargest boost, rocketing 16.8 cents to post a final trade of $2.515last night after briefly settling at $2.433 earlier in the day.

Regulations governing the construction of natural gas pipelinefacilities took center stage at FERC yesterday, with the Commissionputting a package of proposals on the table aimed at streamliningand expediting the certification process for new projects. It seeksto do this while at the same time getting affected landowners moreinvolved in the process.

Calling his own merchant underground natural gas storage fieldin northern California a “done deal,” a Calgary-based AlbertaEnergy official speculated that any competitors in developingnonutility, market-based storage “have quite a bit of work to do”to get a competing facility up and running. It was an indirectreference to a smaller, competing facility whose backers say theywill file with California regulators Oct. 1. (See Daily GPI, Sept.21)