Position

The futures market was perched at a precarious position cominginto trading Monday. Last week’s precipitous decline had positionedthe spot February contract near its all-time low of $1.77, leavingsome traders to suggest that Monday’s price action could dictatethe course of trading for the rest of the week. A move below $1.77could open the door for fresh selling, while a rebound above $1.77might prompt short covering. And although Monday’s move below the$1.77 level did not entice the cascade of selling some expected, itdid signify that the bears are not finished yet. February endeddown 5.1 cents to $1.779 after trading to a $1.74 low.

With San Juan Basin-Southern California border (bidweek) basisaveraging double what it was last year through November, 36cents/MMBtu compared with 18 cents, and rising, Dynegy’s $70million deal for 1.3 Bcf/d of El Paso Natural Gas’ firm pipelinecapacity is looking better all the time for the company, DynegyPresident Stephen Bergstrom said in an interview with NGI.

FERC is sending out mixed signals about its position onauctions. The Commission staff, on the one hand, has been workingsteadily since July towards developing an “efficient andcost-effective” auction structure for the market, yet last week ittold critics that the auction concept might not be the best routeto go. In fact, staff threw down the gauntlet challenging the gasindustry to come up with a better way to sell pipeline capacity inthe short-term market.

Touting the strong position of natural gas in any newinitiatives to reduce global warming, former Sen. J. BennettJohnston urged support for an early action program to give creditfor companies taking early steps to reduce greenhouse gasemissions.

Futures traders spent most of Monday in a “wait’n-see position”poised to react quickly if the market broke in either direction.However, no fresh news could be gleaned from yesterday’s market andas a result the market took what has become the path of leastresistance lately to move lower in quiet trade. The Septembercontract slipped 2.1 cents to $1.926.

The July contract closed out the week on a positive note aslight short-covering and position squaring bolstered the market6.5-cents to settle at $2.035 on Friday. July was not the only bigwinner, with nearby August also coming to life. August was up 7.3cents bringing the 12-month strip to $2.329.

NGC Corp. touted several recent developments as evidence of itsstrong position in the California electricity marketplace.

Williams opened the doors to its new 300-position,21,000-square-foot energy trading floor, which it says featurestechnology, design and amenities surpassing those of most companiesin the nation. The trading floor is part of a new236,000-square-foot resource center adjacent to the 50-floorWilliams Tower in Tulsa, OK, where Williams has its corporateheadquarters. “As the second most profitable energy marketer in thenation, we remain committed to our customers by providing ourtraders with the absolute best tools available to compete andsucceed,” said Jerry Gollnick, senior vice president of energymarketing and trading for Williams.