Pick

As energy merchants and utilities slowly pick themselves off the mat and get back into the game, CMS Energy Corp. and TXU Corp. last week scored some positive news.

Working off oversold conditions, natural gas futures turned higher Tuesday, as locals tried to pick a bottom, and trade and commercial sellers were slow to emerge. The end result was a 9.4 cent gain to $3.872 for the December contract, just a few ticks below its high for the session. Estimated volume was 65,897.

Warmer weather currently is putting downward pressure on gas prices, but some market observers believe a sudden cold snap could quickly and dramatically change the picture for this winter’s market. Consultants at Wakefield, MA-based Energy Security Analysis Inc. say while a $10 peak is unlikely, $6/MMBtu certainly is possible. However, Tim Evans, futures analyst with IFR Pegasus, believes the market already hit its winter peak, the $4.44/MMBtu reached last week by the December contract.

Warmer weather currently is putting downward pressure on gas prices, but some market observers believe a sudden cold snap could quickly and dramatically change the picture for this winter’s market. Consultants at Wakefield, MA-based Energy Security Analysis Inc. say while a $10 peak is unlikely, $6/MMBtu certainly is possible. However, Tim Evans, futures analyst with IFR Pegasus, believes the market already hit its winter peak, the $4.44/MMBtu reached last week by the December contract.

Natural gas prices reflect a degree of enthusiasm that is typical for this time of year, particularly if there are hurricanes lurking in the Gulf of Mexico, but according to one market observer, once traders weigh healthy storage inventories against expected winter weather, an option strategy designed to take advantage of high levels of volatility may be the trade to make.

Unocal Corp. announced plans to pick up the remaining 35% of Pure Resources Inc. which it does not already own, offering 0.6527 shares of Unocal common stock for each outstanding share of Pure’s common stock. The transaction is valued at about $400 million based on Unocal’s current share price.

Williams could pick up some needed cash and finally end its costly affiliation with its former telecommunications unit by selling its shares to an unknown, deep-pocketed investor, according to news reports. Williams Communications Group Inc., which siphoned off its parent’s cash before spinning off, and then never turned a profit, filed for bankruptcy protection earlier this year (see Daily GPI, April 24).

Williams could pick up some needed cash and finally end its costly affiliation with its former telecommunications unit by selling its shares to an unknown, deep-pocketed investor, according to news reports. Williams Communications Group Inc., which siphoned off its parent’s cash before spinning off, and then never turned a profit, filed for bankruptcy protection earlier this year (see Daily GPI, April 24).

Duke Energy Corp.’s deal to pick up Vancouver-based Westcoast Energy moved close to completion Friday after receiving approval from the Securities and Exchange Commission (SEC) and federal Industry Canada (similar to the U.S.Dept. of Commerce). The cash, stock and debt acquisition, valued at US$8 billion, would allow the Charlotte, NC-based diversified energy company to grow its Canadian business and expand its North American natural gas infrastructure. As part of the transaction, Duke also plans a significant financial investment in its stake, adding several new Canadian offices and donating funds for Canadian educational research.