Prompts

While California’s utility watchdog, The Utility Reform Network, called PG&E’s $800 million rate cut last week for electric utility customers “a long way from fair,” utility customers still will be looking their first rate cut since before the 2000-2001 electricity crisis.

Much higher gas prices and a more intense interest in adding gas production in the Rockies has TransColorado General Manager Julian Huzyk optimistic that a major pipeline expansion out of the region is more likely now than ever before. TransColorado last week revised its expansion plans to accommodate a total of 600,000 Dth/d of new production from the Piceance, Paradox, Uinta and other basins in Colorado, Utah and Wyoming. It previously had been planning a 150,000 Dth/d expansion (see NGI, Jan. 27).

Natural gas futures continued to defy gravity Wednesday afternoon as traders refused to sell the market despite the announcement by the American Gas Association (AGA) that only 64 Bcf was pulled from storage last week. That lack of selling pressure combined with the cold temperatures across much of the midwestern and eastern United States gave bulls the confidence they needed to boost the April contract higher on its first day as the prompt contract. April finished at $2.427, up 3.8 cents for the session and just off its high for the day at $2.44. At 71,577 contracts, trading volume was light.

Breaking out of the extremely-tight, 4-cent trading range that corralled prices for much of the session, natural gas futures moved lower Wednesday afternoon on the heels of a disappointing (for bull traders) announcement that only 124 Bcf was pulled from storage last week. The selling pressure was felt immediately after the 2 p.m. EST release and by 2:30 p.m. February had sunk to a new, life-of-contract low at $2.04. A slight up-tick at the closing bell lifted the prompt month to a $2.076 settle, down 3 cents for the session.

Buoyed by a larger-than-expected 137 Bcf storage withdrawal figure, natural gas futures probed the upside Wednesday afternoon as traders continued to shy away from the short side of the market. After working its way lower throughout most of the morning, February turned higher just before noon EST when it became apparent that sellers would not be able to keep prices below the $2.30 level. The prompt month finished the session in an undeniably bullish manner, carving out a new two-week high and closing 10.3 cents stronger on the day at $2.394.

In what a Midcontinent/Midwest trader called the first “real” spell of something approximating winter that the market has seen so far this season, cash prices made a huge turnaround Monday from the serious weakness they had shown heading into the weekend. Nearly all points rose at least 30 cents, and gains of half a dollar or more were not uncommon. Appalachian pipe CNG and some Northeast citygates peaked at $3 or more, a marketer said. NGI’s Henry Hub average gained 40 cents to $2.14.

Stemming a two-week, $1.25 price slide, natural gas futures rebounded last week amid neutral to bullish fundamental factors and increasing constructive technical clues. After carving out a fresh 19-month prompt month low by trading down to $2.255 earlier in the week, the October contract finished strongly at $2.50 Friday, up 6 cents for the session and just beneath its $2.53 high for the week.

With a twist of irony that made even the most seasoned traders shake their heads, natural gas futures rebounded strongly yesterday afternoon, just moments after fresh storage data was released showing that the year-on-year storage deficit has finally been eliminated. With that the market broke a string of seven-straight Wednesday losses as traders propelled the new prompt month July contract up 17.1 cents to close at $3.981.

Pipeline companies are having a hard time keeping up with therapidly growing coal-bed methane production in the Powder RiverBasin. Coastal Corp.’s Wyoming Interstate Company just put itsMedicine Bow lateral into service last November and the companyalready is filing plans for a second expansion, which will addanother 675,000 Dth/d of firm capacity, bringing the total to morethan 1 Bcf/d.