Resist

The market turned mostly softer Tuesday, but still had a few flat to modestly higher points in the Gulf Coast and Midcontinent/Midwest in the overall mix. It’s likely that a semi-meltdown in the energy futures complex Tuesday, along with generally bearish weather and expectations of another fairly large build in storage to be announced Thursday, will unite all cash points in declines Wednesday.

Tossing aside arguments by an Arizona regulatory commission representative who came to San Francisco to articulate his state’s case, California regulators Thursday unanimously agreed to adopt proposed rules for mandating that the state’s major gas and electric utilities bid to keep up to 725 MMcf/d of firm capacity on El Paso Natural Gas serving the state to prevent it from being shifted to neighboring Arizona.

Unable to resist the weakness of weather fundamentals any longer, combined with facing the usual demand dropoff over a weekend, swing prices registered double-digit losses at nearly all points Friday. An Overnominations Day declaration for Saturday by Southern California Gas caused the biggest drop of about half a dollar at border-SoCal Gas.

California utilities’ eroding creditworthiness is extendingbeyond the electricity sector and seeping into the naturalgas-buying parts of their business as well, according to a PacificGas and Electric Co. witness testifying Friday in the ongoing stateemergency rate hearings.

Enterprise Oil, the largest independent exploration andproduction company in Europe, apparently couldn’t resist the marketopportunities in the U.S. any longer. The company paid $127.3million last week for all of drilling company R&B Falcon Corp’sE&P interests in the Gulf of Mexico. The transaction covers a50% stake in the Boomvang field about 100 miles south of Galveston,TX, and a major stake in the Gyrafalcon prospect, which is about100 miles offshore Lousisiana in Green Canyon block 20.

Enterprise Oil, the largest independent exploration andproduction company in Europe, apparently couldn’t resist the marketopportunity in the U.S. any longer. The company paid $127.3 millionyesterday for all of drilling company R&B Falcon Corp’s E&Pinterests in the Gulf of Mexico, which includes a 50% stake in theBoomvang field about 100 miles south of Galveston, TX, and a majorstake in the Gyrafalcon prospect, which is about 100 miles offshoreLousisiana in Green Canyon block 20.

Michigan citygates and intra-Alberta numbers stuck out like sorethumbs Wednesday in an incremental cash market where all otherpoints were dropping between a nickel and 20 cents. A furtherdecline in the November futures contract combined with continuingmild weather and the perception that Hurricane Mitch is only a veryremote threat to offshore production to cause the cash softness,sources said.

Cash market predictions proved accurate again as pricescontinued to slide going into the weekend Friday. It didn’t take arocket scientist to make that call, sources said, as forecasts ofgorgeous weather virtually throughout the nation (and north of theborder too) should lower gas load greatly by encouraging a lot ofoutdoor activity.

The August Nymex contract probed lower yesterday but managed torebound before the close, bringing an end the price slide sincelast Thursday’s $2.425 high. Tuesday’s choppy trade left the spotmonth up 1.7 cents at $2.226 on the day. Despite the tight tradingrange and modest gain posted for the day, the session was anythingbut uneventful. Estimated volume confirmed the active market with53,327 contracts changing hands.