Physical

The cash market finally found the burden of struggling higher with little visible means of fundamental support too much to bear Thursday, resulting in across-the-board retreats ranging from about a nickel to a little more than 15 cents.

Northwest began maintenance Monday at Kemmerer (WY) Compressor Station that will last through Friday and result in a physical capacity reduction of about 30,000 Dth/d. Northbound volumes through Kemmerer continue to be overnominated in excess of 500,000 Dth/d, Northwest said (the design capacity is 475,000 Dth/d, according to the bulletin board), further diminishing the pipeline’s Jackson Prairie storage account. No Park and Loan service will be available during the maintenance period.

Despite cold weather in the Mid-Atlantic and Northeast and associated up ticks in physical gas prices, natural gas futures slid lower Monday in another in a growing string of lackluster trading sessions. After pushing prices lower in the morning, local traders covered their shorts in the afternoon when it became apparent a close below $5.00 was not in the cards. May finished at $5.06, down 8.6 cents for the session. At 42,486, estimated volume was extremely light.

Buoyed by hot weather and spiking Northeast physical prices, natural gas futures ended higher Tuesday, as commercial traders continued to favor the long side of the market. After touching the $3.00 mark Tuesday afternoon for the first time since Aug. 1, the September contract ebbed slightly to close at $2.975, a 1-cent increase for the session. With 102,854 contracts changing hands, Tuesday’s heavy volume in the gas pit lent credibility to the up-move.

Buoyed by triple-digit heat, record-setting power loads, and $7.50 physical prices in the Northeast United States, natural gas futures were fast out of the chute Monday as traders set their sights on a small but unfilled gap left on the daily chart since July 8. Riding that buying wave, the prompt month made an attempt, but ultimately failed, to fill in the $3.08-125 gap completely. Sellers were quick to punish this technical weakness in the noon hour, and market-on-close selling added the final touches Monday afternoon. By its 2:30 p.m. expiry, the August contract had sunk back to $2.976, up 4 cents for the session, but more than 13 cents off its high for the day.

Besides pointing up an inadequate physical intrastate natural gas transportation infrastructure, the staff of the Federal Energy Regulatory Commission, has suggested the California Energy Commission (CEC) look into how the regulatory environment may be discouraging electric generators from hooking up to pipelines and distribution systems in the state.

Houston-based RedMeteor Inc., which provides both Internet and voice brokerage services for physical crude oil, wholesale refined products, natural gas, electricity and natural gas liquids, will begin offering price indications as well as firm bids on its exchange platform beginning next Monday (June 18).

Amid a devastating combination of weak cash prices andpost-storage-release selling, natural gas futures tunneled lowerWednesday afternoon in a long liquidation frenzy that caught morethan a few traders off guard. After checking to its highest levelin more than a month early in the trading session, the Aprilcontract picked up downward momentum throughout the afternoon tofinish the day at $5.384, or 23.7 cents lower, but 28.7 cents morethan where it was when it began its tenure as prompt month atNymex.

Political forces and physical problems are at the root of theconstrained California energy market, and because of it, otherstates have slowed their pace toward deregulation and may evendecide to forego it for a while, according to an energy expert whohas helped guide companies through regulatory hearings.