Pressure

With the pressure of an exhaustive state regulatory review andscrutiny of its neighbors, San Jose, CA-based Calpine Corp. says itis prepared to spend whatever it takes to make a 600 MW naturalgas-fired merchant power plant in its headquarters city a “model”for efficiency and environmental cleanliness among its growingfleet of gas-fired power plants nationally.

With the pressure of an exhaustive state regulatory review andscrutiny of its neighbors, San Jose, CA-based Calpine Corp. says itis prepared to spend whatever it takes to make a 600 MW naturalgas-fired merchant power plant in its headquarters city a “model”for efficiency and environmental cleanliness among its growingfleet of gas-fired power plants nationally.

Thursday marked the first time bears took firm control of themarket all week, as most price points fell between a nickel and 10cents. A large majority of the deals were made through the weekend,as many trading offices were expected to be sparsely populated onGood Friday.

After rallying to new highs earlier last week, futures cameunder some selling pressure on Friday and prices slipped 0.9 cents,ending the week at $3.079. The high for the day was $3.100, a halfa cent less than the day prior and the low was $3.050 a half a centhigher than Thursday’s low. Despite the somewhat negative news, theMay contract failed to provide observers with a significant signalto start the new week.

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.

In response to pressure from the market and Nymex, the AmericanGas Association last month announced that it would move forward therelease of its weekly gas storage data. Some traders and analystspredicted the change would increase liquidity, but most observersbelieved it would have little or no impact on the market. In fact,some market watchers even said the early release would decreasevolatility because of the natural efficiencies inherit in Nymex’sopen outcry trading system.

For the second trading session in a row, natural gas futureswere hit with a wave of selling pressure Monday, as bears basked inthe glow of forecasts calling for continued above-normaltemperatures across much of the country. After showing earlypromise last week in trading up to $2.485, the January contract hassince slipped to new life-of-contract lows, closing at $2.224yesterday. Activity was with 69,325 contracts changing hands.

After notching gains in both the regular and Access tradingsessions Wednesday, the futures market sank again yesterday asbulls battled with an increasingly negative technical picture andunsupportive weather outlooks. Within an hour of its $2.895 open,the December contract had already slipped a nickel lower. From thatpoint it continued to chop lower for the rest of the session,finishing down 4.7 cents at $2.826.

California legislators have bowed to industry pressure andextended the state’s ban on natural gas unbundling for residentialand small business customers. The new law (AB 1421) passed in alate-night session in the waning days of the current legislaturewill maintain the utilities’ role as the almost exclusive providerfor small customers.