Pressuring

With gas storage levels in the United States and Canada well above historical averages and possibly approaching record highs, there will be increasing pressure over the next few weeks for gas prices to come tumbling down. Just how long they will remain down, however, probably depends on the weather and the price of crude oil, which could go to the moon based on action over the last few days, analysts say.

Increasing demand is pressuring prices, Natural Gas Supply Association (NGSA) President R. Skip Horvath said Friday, reiterating the group’s predictions in its Winter Outlook last September that market fundamentals would put upward pressure on the natural gas market.

After pressuring prices lower ahead of the weekend, natural gas futures traders bid the market back up Monday in reaction to forecasts calling for Isidore to re-strengthen as it moves off the Yucatan Peninsula into the warm waters of the Bay of Campeche. Buying was seen in two distinct surges. Prices bubbled steadily higher throughout the morning and then spiked at the closing bell. The October contract finished at $3.978, 22 cents higher for the day and just off its new 15-month top at $3.99. The November contract, which will become the prompt contract after October goes off the board Thursday at 2:30 p.m. EDT, finished 18.3 cents stronger at $4.175.

The departure of Sen. James Jeffords from the Republican Party, declining natural gas prices and the absence of hot weather are beginning to ripple throughout the energy industry, with many of the leading energy stocks dipping lower last week and creating an “increasingly selective” investing environment, said Merrill Lynch analyst Donato J. Eassey Thursday.

The departure of Sen. James Jeffords from the Republican Party, declining natural gas prices and the absence of hot weather are beginning to ripple throughout the energy industry, with many of the leading energy stocks dipping lower last week and creating an “increasingly selective” investing environment, said Merrill Lynch analyst Donato J. Eassey Thursday.

After a strong opening yesterday, gas futures were hit with awave of selling, pressuring the market down to a $2.19 midday low.From there the February contract limped mostly sideways until alate, short-covering rally trimmed losses into the close. Theprompt month finished at $2.244, down 1.6 cents for the day.

For the second straight Thursday, natural gas traders ignored aseemingly bullish American Gas Association storage report bypressuring the market lower in light, long liquidation. The Junecontract was the hardest hit by the sell-off, slipping 6.4 cents to$2.295 in active trading.

TransColorado Gas Transmission started pressuring up it Phase 2extension into western Colorado last week and expects to begintransportation services from the northern Rockies to the San JuanBasin some time next month, pending FERC approval of its ratedesign.

The New York Public Service Commission released the text of itspreviously announced gas unbundling policy statement, laying outits plan to force the state’s LDCs out of the merchant functionwithin three to seven years (see NGI Oct. 12, 1998) and endmandatory capacity assignment by next April. But it can expectstrong opposition from a number of New York LDCs who aren’t willingto give up gas sales and who say capacity assignment is areasonable way to recover stranded costs.