Relatively

With commercial traders reticent to make a move before the weekend and many local speculators leaving the trading pit early for their annual trip to the Kentucky Derby, natural gas futures moved quietly lower Friday to cap off a negative week of trading activity. With its $5.255 close, the June contract finished 1.2 cents lower for the session and down almost 30 cents for the week.

Relatively innocuous cold fronts trudging through the major market areas of the East weren’t enough to keep most points from turning south again. Prospects for waning weather-related demand as the week proceeds and weak energy futures caused the overall market to retreat by larger amounts Tuesday than it had advanced Monday, despite a few points recording flat to moderately higher numbers.

After falling at a gut wrenching pace last week that left the April contract $1.56 lower than the previous Friday, the near month managed a 7.8-cent gain on Monday to $5.507. In fact, the three nearest contracts — April, May and June — all made gains while the further-out months lost a few cents. Analysts’ opinions were mixed, however, on the near-term and long-term direction of this market, and a war with Iraq is likely to make the future even less clear.

Pacific Gas & Electric declared a systemwide Stage 2 high-inventory OFO for Saturday. It carried penalties of $1/Dth along with a relatively lenient 7% tolerance for positive daily imbalances.

After a relatively long absence of them, an Overage Alert Day notice (with 10% tolerance for negative daily imbalances) was in effect again Monday for Florida Gas Transmission’s market area. However, this OAD was short-lived, being discontinued Tuesday.

After a relatively long absence of them, an Overage Alert Day notice was in effect again Monday for Florida Gas Transmission’s market area. The notice carried a 10% tolerance for negative daily imbalances. FGT said forecasts indicated that cold weather would continue in Florida and that its capacity was being heavily utilized.

Despite a relatively strong balance sheet compared to the energy sector’s many fallen giants, San Diego-based Sempra Energy still faced mixed reviews from credit rating agencies last week, and its prospects for re-negotiating its $6.6 billion 10-year power supply deal with California’s Department of Water Resources were uncertain despite the ongoing federal regulatory proceedings on the DWR contracts as a whole.

In its latest seasonal update for June to August, WSI Corp. is forecasting a relatively strong cooling demand in the Northeast and Southwest, which raises the possibility of electricity-driven price support at key regional gas hubs this summer. Although cooler temperatures in the Pacific Northwest and Southeast should free up power for export to neighboring regions, WSI said, “constrained areas with limited generating and import capacity, such as New York City, Long Island and southwest Connecticut, remain vulnerable to heat-driven price spikes.”

Rising oil prices, a relatively cooler March and April, an improving economic picture and a production decrease all contributed to higher than expected natural gas prices over the past few months, the Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook released last Monday.