Price

Canadian producers expect their natural gas prices to rise by asmuch as 60% when the next heating season catches up with effects ofthe 1998-99 drilling slump.

Canadian producers expect their natural gas prices to rise by asmuch as 60% when the next heating season catches up with effects ofthe 1998-99 drilling slump.

The cash market resumed its climb Thursday, buoyed by a risingHenry Hub futures contract, a tightening supply situation,spreading cold weather and air conditioning load from Texas throughthe Southeast. A “lean” storage report Wednesday afternoon added tobullish sentiment, a marketer said.

It didn’t surprise any traders when the cash market was theteensiest bit softer Wednesday. What did prompt some expressions ofamazement was that prices held up as strongly as they did. Betweena falling futures screen and overall weaker demand fundamentals, itseemed that prices should have dropped at least a nickel or more,one source said. Instead, few points were down more than a coupleof pennies, and some registered flat showings. Northern NaturalGas, serving a market area with near-winter-like chill, evenmanaged small gains.

After halting a three-day, 25-cent price slide Tuesday, naturalgas futures slowly began to build yesterday what bulls would liketo think is a base on which further gains will be added. Andalthough it is far from universal, that sentiment was echoed byothers who think that the confluence of relatively strong cashprices and rallying crude oil prices are supportive factors fornatural gas. The April contract finished 3.1 cents higher at $1.748in light trading.

A storage report considered bearish by most traders set thestage for softness in the cash market Thursday, then a plungingfutures screen virtually guaranteed cash declines. Sure enough,nearly every point fell between 5 and 8 cents. “We’re just tradingdown with the screen,” said a Western marketer.

The cash market shrugged off Tuesday’s modest weakening toresume an upward climb Wednesday. Yesterday’s gains weren’t aslarge as those on Monday (mostly 5-10 cents compared with 10-20cents, respectively). Also unlike Monday’s trading, there was nogeographical divergence with Western increases being significantlyless than the East’s; the Wednesday upticks were mixed relativelyequally in both areas.

While making clear the administration would not be engaging inany market-rigging through price ceilings or floors, EnergySecretary Bill Richardson said it nevertheless was working onfurther measures to aid the depressed oil and gas industry.

The cash market, which had been fairly consistent in overallprice movement for most of last week, went into the weekendstarting to diverge on an East-West axis. While Friday’s mix ofgains and losses amounted to a generally flat wash, Eastern pointstended to be flat to about a nickel higher, and their Westerncounterparts tended to range from flat to about a nickel lower.