The price picture looked pretty bleak for bullish types earlierthis week, but they were taking heart Wednesday from a cashrebound, further strength in futures and signs that winter weatherlikely will return for a new siege, just as the groundhog predictedlast Friday. Most eastern gains tended to be in the teens, but mostwestern points rose by 20 cents or more, with the PG&E citygate(up almost $1.50) as the leader of the pack.
Outlook
Articles from Outlook
Prospects of Halting Price Dive Appear Slim to None
The rout was on Tuesday in the cash market. Buffeted by a fairlybenign weather outlook, both near-term and for the transitionperiod into February, and a plunging screen, prices fell betweenabout 50 cents and a dollar at almost every point. Malin’s declineof about 15 cents spotlighted it as relatively firmer than the restof a very weak market.
Power Costs Prompt Downgrade of PacifiCorp
High power costs in the Pacific Northwest prompted Moody’sInvestors Service yesterday to change its outlook on securitiesissued by PacifiCorp (senior secured debt at A2) to negative fromstable.
Ft. Liard Production Improves Canadian Outlook
By the end of the month, Chevron Canada Resources Ltd. expectsonly two wells drilled in the Northwest Territories to be producingabout 120 MMcf/d of gas. That is welcome news to a market indesperate need of new supply sources, particularly in westernCanada.
Ft. Liard Production Improves Canadian Outlook
By the end of the month, Chevron Canada Resources Ltd. expectsto be at capacity for its second of two wells drilled in theNorthwest Territories. First production and sales are flowing fromthe Fort Liard M-25 well at 35 MMcf/d, and Chevron expects to rampup production by next week to 50 MMcf/d.
Industry Briefs
The New England Council and the New England Governors’Conference will present “Winter Fuels Outlook: A National andRegional Perspective” in Boston today, offering insight fromindustry, academic and government officials about the comingmonths. Massachusetts Gov. A. Paul Cellucci, who also chairs theNew England Governors’ Conference, will speak, as well as James T.Brett, CEO, New England Council; Roger Cooper, American GasAssociation; John Felmy, American Petroleum Institute; and MarkRodekohr, Energy Information Administration, U.S. Department ofEnergy. The conference has been called in response to a recentprediction by the DOE that with a “normal” heating season, naturalgas prices likely will increase by as much as 50% this winter.Similar predictions have been made about the cost of heating oil.To learn more about today’s conference, contact David Graves of RDWGroup Inc. at (401) 521-2700, extension 106.
Futures Crumble Amid Bearish Storage Report, Outlook
The price see-saw continued yesterday in the natural gas pit atNymex as traders made quick work of Tuesday’s advance with a latesession sell-off. The August contract was dealt the most severeblow, tumbling 16 cents to finish at $3.884. Estimated volume wasmoderate, with 71,148 contracts changing hands.
Futures Outlook; It Takes Two to Tango
Ask two traders about the direction of the natural gas futuresmarket and you will likely get two different opinions, and that wasnever more true than last week when Tom Saal of Miami-based PioneerFutures and Tom Riley of Riley Natural Gas spoke about hedging forproducers at GasMart/Power 2000 in Denver.
Industry Briefs
Although the tight supply/demand situation for gasoline took thespotlight in the Energy Information Administration’s Short-TermEnergy Outlook last week, the EIA was pretty bullish on natural gasas well. The administration has gas demand rising 3.5% this year to22.17 Tcf and 4.1% next year to 23.08 Tcf. It projects a major 22%wellhead price hike this year to an average of $2.56/MMBtu followedby a much smaller rise in 2001 to $2.61. EIA sees dry domestic gasproduction inching up about 1% this year and only about 0.2% in2001. Imports are seen rising 8.3% this year to 3.67 Tcf and 2.7%next year to 3.77 Tcf.
Analyst: Gas Outlook Favors HS Resources
Friedman, Billings, Ramsey & Co. Inc. initiated coverage ofHS Resources with a “buy” rating and a 12-month price target of $30based on expectations for strong summer gas prices. In a 16-pageresearch report, FBR senior research analyst David Khani identifiedHS as the dominant oil and gas producer in the Denver-Julesberg(D-J) Basin.