Reaction

In a delayed reaction to the bearish storage news released Thursday, the natural gas futures market stair-stepped lower in three distinct selling waves Friday.

FERC is proposing to survey up to 300 natural gas and power traders twice — this October and next March — to determine if they are following guidelines outlined in the Commission’s July policy statement on reporting price information on energy trades to industry publications. The Commission said the survey would determine whether “further steps” were required to ensure the accuracy, reliability and transparency of price indices (PL03-3).

FERC is proposing to survey up to 300 natural gas and power traders twice — this October and next March — to determine if they have adopted voluntary guidelines for reporting more detailed information on energy trades to industry publications. The Commission said the survey would determine whether “further steps” were required to ensure the accuracy, reliability and transparency of price indices.

As NGI sources had predicted, the bearish revision of storage data Thursday and the screen’s negative response had their cash impact Friday. Weekend prices sank in double-digit amounts at all points, with most declines measured at about a quarter or more.

In a delayed reaction to bearish storage data released Thursday that revealed the first net refill of the 2003 injection season, natural gas futures dipped lower Friday as commercial traders continued to liquidate their long positions. Not even double-digit rises in physical market prices could support May futures, which lacked originality by closing at the same price — $5.146 — as the final expiration of the April contract Thursday. At 44,630, estimated volume was extremely light ahead of the weekend.

Local opposition was already forming earlier this week along the Southern California coast in response to Houston-based Crystal Energy LLC’s $125 million proposal to transform an offshore oil platform in federal waters 11 miles off the coast of Oxnard, CA, into a liquefied natural gas receiving terminal that would pipe gas to shore through a new underwater pipeline. The gas would come onshore near the Reliant Energy’s coastal Mandalay Bay Power Plant.

In reaction to forecasts calling for moderating temperatures and in anticipation of Thursday’s release of fresh storage data, natural gas futures slumped Wednesday amid light long liquidation. And although the March contract finished with a 11.8-cent decline for the session to close at $5.644, it remains in an uptrend on the daily chart. Estimated volume was heavy, with an estimated 101,308 contracts changing hands.

In reaction to the arrival of the much-anticipated blast of cold air in the eastern half of the country, natural gas futures rocketed higher Wednesday as early short-covering by funds and commercials triggered waves of buy-stop-loss orders. By virtue of its $5.50 high trade, February notched a new all-time contract top and traded within 3 cents of the 21-month prompt-month high made by the January contract on Dec. 13. It closed at $5.43, up 32.3 cents for the session.

In concert with tumbling crude oil prices, natural gas futures cascaded lower in two distinct selling waves Monday as light profit taking enabled the market to fill a key gap left on the daily chart from mid-December. The February contract finished at $4.80, down 22.2 cents for the session. With just 32,305 changing hands, estimated volume was light, especially considering the size of the price move. Natural gas futures will cease trading at 1 p.m. EST Tuesday and re-open with Access trading at 7 p.m. Wednesday.