Rebound

Although producers are seeing a significant rebound from themarket doldrums over the past couple years, Fitch IBCA sees troubleahead in the form of increasing finding and development costs andsignificant opposition to pipeline construction.

Nearly all markets ranged from flat to just over a dime higherin post-weekend trading Monday, with most increases on either sideof a nickel. The stronger rises tended to occur mainly at westernpoints, while most of the very mild softness was at Northeastcitygates.

The cash market made a strong rebound Monday from the weekend’sprice plunge as nearly every point rose by 15 cents or more. Inmost cases the gains did not recover all of the price territorythat had been lost Friday. However, the Northeast—one of the fewregions seeing any weather close to resemblingwinter —didmanage to make up for just about all of Friday’s citygate declines.

Following one of the quietest trading sessions in recent memoryThursday, the futures market snapped back to life Friday as tradersetched out a wide, 20-cent range in bumpy, pre-weekend dealings.After trading as low as $2.55 and as high as $2.76 the Novembercontract finished the week strongly, gaining 5 cents to $2.692.Estimated volume of 79,860 confirmed the heavy activity.

October futures managed to achieve a moderately strong recoveryFriday but apparently there was too much negative baggage left overfrom Thursday’s quarter-plus plunge to support cash. Physical gasprices continued their downhill slide, buffeted by the combinationof weak holiday weekend demand and mild weather virtuallyeverywhere. “Cash just didn’t stand a chance today,” a marketersaid.

Mitchell Energy & Development Corp. said the rebound inenergy prices raised its second quarter average gas pricerealizations 30% and pushed gas liquids price realizations up 25%compared to first quarter amounts. Combined with cost cutting gainsand other operating efficiencies implemented over the past year,Mitchell said the improvements should result in quarterly earnings(excluding oil and gas property sales) that will be three timesgreater than the First Call consensus estimate of 13 cents pershare.

Despite a round of midday profit taking, the natural gas futuresmarket was able to eke out a modest advance amid continued see-sawtrading activity yesterday. The September contract led all othermonths, posting a 1.9-cent gain en route to a $2.727 close.Estimated volume was robust with 86,261 contracts changing hands.

Eastern markets emerged from the weekend without seeing anyrebound from Friday’s slump. Prices continued to decline by mostlysmall amounts, with various points ranging from flat to just over anickel lower. A small futures drop contributed to the cashbearishness, traders said, but more than anything else it was arelative dearth of air conditioning load that sent prices down.

For the second trading session in a row, early selling pressurewas reversed in afternoon trading allowing the market to close nearits daily high. The July contract notched a $2.325 low both Fridayand Monday, but settled back up above $2.37 both days. Evenestimated volume figures were similar with yesterday’s 43,630falling just short of Friday’s 45,070 mark.