Normally

The normally bullish energy team with Raymond James & Associates Inc. Monday said U.S. natural gas prices may rally toward the end of this year, but plentiful supplies and an overabundance of storage could lead to a “disaster” in 2008.

Even normally bullish energy analysts last week turned bearish on the short-term outlook for natural gas prices, with many now believing gas prices will remain low until some of the excess storage capacity is removed.

The normally bullish Raymond James energy team on Monday reduced its 4Q2006 natural gas price forecast by $2, to $5.75/Mcf from $7.75, based on the “significant bearish shift” in gas storage injections. However, it held its 2007 forecast at $10/Mcf.

Despite cold weather in several areas following a weekend blizzard on the East Coast that normally would be expected to prop up spot prices, the cash market softened at nearly all points Monday. It was a case of just not cold enough in enough areas, along with the screen’s slide last week that got extended into a sixth day and high comfort levels with storage inventories, one source said.

The continuing crushing heat through the Southwest Tuesday pushed several Gulf Coast points into $10.00 territory normally reserved for the Northeast, while price increases in other areas of the country could be termed relatively moderate, matching their weather. But the overall momentum continued up, spurred by continuing futures market gains and growing concern about potential offshore shut-ins in the near future.

Normally friendly and past partners in various deals, Pacific Gas and Electric Co. and Calpine Corp. are at odds over what the utility alleges is the merchant power plant developer/operator’s conspiring with merchant natural gas storage operators at Lodi in Northern California to bypass the PG&E utility backbone pipeline transmission system. As a result, PG&E’s utility alleges that natural gas retail customers could pay an extra $20 million.

Normally a trading day in which many points record price movement of half a dollar to a dollar or more would be considered rather volatile. But after more than a week in which most of the market recorded daily changes spanning several dollars, Tuesday’s activity seemed rather sedate by comparison. No doubt many traders welcomed a break from the recent spate of hyper-volatility.

FERC Chairman Pat Wood’s normally sunny demeanor quickly turned to one of agitation last Wednesday after Commission staff briefed him and other Commissioners on an order that directs Wisconsin Electric Power Co. (WEPCO) to explain apparent factual conflicts relating to the separation of control area and merchant function employees.

Midwest Generation reported last Thursday that operations were running normally at its Illinois power plants in the wake of a strike by union employees, who rejected a pay increase and demanded contract provisions that Midwest said would compromise the company’s ability to operate and maintain its facilities.