Regions

With lowly Ernesto — now a tropical depression — sticking to a northern path and allowing the Gulf Coast to continue to quietly observe Hurricane Katrina’s one-year anniversary, October natural gas futures dug lower Wednesday, exploring price territory carved out Tuesday by the expiring September contract.

With temperatures creeping slightly higher in several regions and some — albeit quite modest — prior-day screen support, cash prices managed to rebound by mostly moderate amounts at a solid majority of points Monday. The market also got a bit of backing from the return of industrial load from its typical weekend slump.

Fitch Ratings on Tuesday assigned or affirmed high ratings and stable outlooks for utilities in the Northwest and Northeast regions, citing low credit risk and strong financial metrics. The stable outlooks were attached to Eugene (OR) Water and Electric Board (EWEB), Energy East Corp., New York State Electric and Gas Corp. (NYSEG), Central Maine Power Co. (CMP) Connecticut Natural Gas Corp. (CNG) and Southern Connecticut Gas Co. (SCG).

Despite record temperatures in a number of regions around the country, August natural gas futures on Tuesday maintained the momentum lower from Monday’s trading session. The prompt month put in a low of $5.520 on the day before settling at $5.555, down 22.8 cents on the day and 79.2 cents lower for the week-to-date.

Cash prices soared Thursday in the Northeast and had another solid day of gains in nearly all other regions of the U.S. because of hot weather, strong power generation demand and continued help from the futures market despite the bearish 89 Bcf net weekly storage injection reported by the Energy Information Administration for last week.

With the current production decline rates in the Gulf of Mexico and restricted access to a number of mineral-rich regions across the U.S., producers are having to look in untraditional places to keep up with the country’s thirst for natural gas. On Wednesday, Ladera Ranch, CA-based Victory Energy Corp. said it has secured participation in a joint venture for the Mesa Prospect in New Mexico with Eldorado Exploration.

If U.S. temperatures during the first quarter of this year are any indicator, many regions of the country could be in for a long and hot summer. According to the National Oceanic and Atmospheric Administration (NOAA), the average temperature for the contiguous United States for March (based on preliminary data) was warmer than average.

Continued strength from the tension-filled petroleum sector combined with warmer than normal temperatures in the southern regions of the U.S. worked to buoy natural gas futures Tuesday as May natural gas finally broke out of its recent $6.65-7.65 trading range. Following a high of $8.10 in afternoon trading, the prompt month went on to settle at $8.008, up 43.1 cents on the day, bringing the week’s two-day total gain to 87.3 cents.

Natural gas processing capacity in the United States grew 9% between 1995 and 2004 to 60,533 MMcf/d, but further increases in processing likely will be needed in regions of gas reserves growth, such as the Rockies, while decreases probably will be seen in the Louisiana Gulf Coast region, the Energy Information Administration (EIA) said in a new report titled “Natural Gas Processing: the Crucial Link between Natural Gas Production and Its Transportation to Market.”