NYMEX

One look at Nymex natural gas futures prices will tell yousupply is a little scarcer than consumers probably would like, andfirst quarter financial reports are confirming that production isdown from last year. Producer earnings soared during the firstquarter as a result of higher oil and gas prices, and lowerdomestic gas production should take some of the blame for the bullmarket.

The second time was a charm for bears at Nymex yesterday whenthey succeeded in taking natural gas below key support afterfailing to do so earlier in the session. Sources pointed totechnical selling that entered the fray when the May contract wasunable to climb back to Monday’s $2.945 high as a major contributorto yesterday’s losses. However, declines were not limited to theprompt month as moderate losses pervaded the entire 12-month strip.The May and June each finished down 6.7 cents at $2.822 and $2.844respectively.

Impressed with their handiwork following Tuesday’s positivemarket momentum, Nymex bulls were on the offensive again yesterdayas they loaded up on long positions ahead of yesterday’s storagereport. After opening at Tuesday’s high of $2.77, the Aprilcontract rumbled higher yesterday morning only to tumble back intothe $2.70s in the afternoon. The prompt month closed up 4.3 centsat $2.794.

NGI Daily Price Index reported last week that Potomac ElectricPower Co. hoped to sell nearly all of its power generationfacilities — with an estimated capacity of at about 6,055 MW —for an “upside price” of about $3 million. Pepco later correctedthe figure to $3 billion. Pepco further said it hoped to narrow thefield of serious bidders to between six and a dozen by March.

In NGI’s story, “El Paso Pulls Off FTC-Required Sellathon” inthe previous issue (see NGI, Jan. 10), it is erroneously statedthat CMS Energy Corp. purchased both the Sea Robin pipeline and ashare of the Destin Pipeline from El Paso Energy. CMS onlypurchased Sea Robin whereas the Destin Pipeline was sold to anundisclosed party. NGI regrets the error.

Nymex front months continued to lose strength yesterday withNovember opening sharply lower and slipping downhill fast duringlight morning trading. There was significant selling early asNovember dropped into the low $2.70s before 11 a.m. then choppedsideways the rest of the day, before ending at $2.744, less than 2cents off its daily low of $2.725 and down 8 cents for the day.

Natural gas futures surged again yesterday amid concerns thatproduction shortfalls associated with a sudden barrage of tropicalstorm and hurricane activity will put pressure on an already tightsupply-demand situation. Fresh off a 28-cent price run late lastweek, the September contract tacked on an additional 12.6 centsyesterday to finish at $3.064 after notching a fresh high at $3.08.Estimated volume was healthy, with 101,460 contracts changinghands.

Natural Gas Intelligence the weekly gas market newsletter published : August 16, 1999

The price tug of war continued yesterday in the natural gas pitat Nymex, but in contrast to the previous seven sessions, bearswere victorious Wednesday as commercial sellers were too much forlocal buyers. After it was apparent the highs for the day had beenset, locals quickly changed their colors and were seen adding tothe selling pressure in a round of afternoon profit-taking. TheSeptember contract slid sharply at the close, settling down 4.4cents at $2.704.