Pricing

The cash market continued its break from the pattern of mixed pricing that prevailed every day last week. The direction of price movement was uniform at all points again Tuesday, but this time it was down instead of up. Moderating weather trends in the Midwest, to be duplicated to a lesser extent over the rest of the week in the Northeast, combined with the pre-existing scarcity of heating load in the South to ease overall spot gas demand.

Without discussion, the California Public Utilities Commission (CPUC) Thursday put an end to long-standing challenges by Southern California Edison Co. to operations and wholesale pricing by Southern California Gas Co. (SoCalGas) for supplies it distributes to Edison and other major customers in the southern half of the state. The CPUC also dismissed petitions for modification of the SoCalGas restructuring case that was finalized late last year with the adoption of a new system of firm access rights on the utility’s transmission system.

Weather has created a haze on the direction of the North American natural gas market, but supply and demand fundamentals continue to support favorable pricing in the longer term, Standard & Poor’s Ratings Services (S&P) energy analysts said Wednesday.

Ceding to requests by both the prosecution and the defense, the trial of three former El Paso Corp. natural gas traders accused of reporting false pricing information to industry publications has been delayed for six months. U.S. District Judge Melinda Harmon approved a joint motion by government prosecutors and the defense teams that will allow the defendants more time to prepare for their trial. A grand jury issued a superseding indictment against James Brooks, Wesley Walton and James Phillips in September. They were to go to trial in November. However, Harmon moved it to May 14. Brooks, a former managing director of El Paso Merchant Energy, was charged in 2005, and former gas traders Walton and Phillips were charged in 2004 with trying to manipulate published indexes by submitting bogus price information to NGI and Inside FERC’s Gas Market Report between 1999 and 2002 (see NGI, Nov. 7, 2005; Dec. 6, 2004). The superseding indictment in September charged each man with one count of conspiracy, 24 counts of false reporting and 24 counts of wire fraud under the Commodity Exchange Act.

Ceding to requests by both the prosecution and the defense, the trial of three former El Paso Corp. natural gas traders accused of reporting false pricing information to industry publications was delayed for six months.

Wednesday saw a repeat of Tuesday’s mixed pricing, and again moderate gains dominated the market. But outside the Midcontinent few points saw increases of a dime or more, and flatness was much more prevalent than before. Some heating load was developing in the Midwest, some cooling load remained in the desert Southwest and parts of inland California, and prices had a modicum of support from the screen’s nickel rise on Tuesday.

A group of natural gas producers, municipal gas distributors and industrial customers has called on FERC to revise its final rule reforming the agency’s storage pricing policies to include more protections for customers. Separately the American Gas Association (AGA), which represents local distribution companies (LDCs), asked the agency to consider a less liberal storage policy in the rule.

A tropical storm entered the Gulf of Mexico over the weekend as expected, but failed to have much impact on mixed cash pricing. Any related shut-ins of offshore production were expected to be minuscule as Tropical Storm Alberto was apparently pointed toward landfall near Tallahassee on the eastern end of the Florida Panhandle.

Most of the cash market was softer Friday, but it had a few flat to moderately higher points in the mix. A prior-day screen increase and some instances of rising cooling load were outweighed by a significant weekend cooldown in the Northeast and the drop in industrial load that typically accompanies a weekend. Also, excess supply issues were accumulating in the West, where many of the largest losses were recorded.