Retreat

It was difficult to discern a clear market direction Thursday as futures prices soared and plummeted, dragging the cash market behind. The EIA reported a larger than expected 111 Bcf weekly storage withdrawal, which initially sent prices higher, but it wasn’t enough to sustain a rally. Futures ended down about a dime and cash prices were mixed with some points up 15 cents while others were down 20 cents.

This week’s mighty price rally, spurred by blasts of colder weather than anticipated in many areas, appeared to have stalled Wednesday as most points were flat to a little more than a dime lower and Northeast citygates plunged almost as fast as they had run up earlier (several fell by about a dollar or so, and the Algonquin citygate was down more than a dollar and a half).

With expansion overseas ending in retreat and the continuing liquidity and regulatory problems plaguing natural gas and power utilities, U.S. executives remain perplexed over the market’s direction, according to a new study by PricewaterhouseCoopers (PWC).

With expansion overseas ending in retreat and the continuing liquidity and regulatory problems plaguing natural gas and power utilities, U.S. executives remain perplexed over the market’s direction, according to a new study by PricewaterhouseCoopers (PWC).

A mild retreat of a dime or more at Transco Zone 6-NYC, Algonquin citygate and Tennessee Zone 6 were exceptions to Thursday’s upticks that ranged from minimal (San Juan-Blanco) to about half a dollar (Niagara, Dawn). Most gains were between about a dime and a little more than 30 cents, with those of 20-30 cents being most common.

In a topsy-turvy trading session conspicuous only for its lack of bullish leadership, natural gas futures slipped lower Wednesday amid two waves of long liquidation. An early afternoon rally was about all the buyers could muster, and it was overshadowed by selling at the market’s open and again heading into its close. March finished at $5.785, down 19.2 cents for the session.

After spiking higher on the news that 123 Bcf was pulled from storage during the previous week, natural gas futures snapped back to unchanged as traders tried to get a better read on bullish weather forecasts circulating the market. After trading just above unchanged from Thursday’s close for much of Friday’s session, the February contract was boosted at the closing bell by a round of short-covering. It closed at $5.344, up 9.3 cents for the session, but 7.6 cents below its high for the day.

After erupting to a new high for the week on the heels of an undeniably bullish inventory report Thursday morning, natural gas futures dropped to a new low for the week Thursday afternoon as traders priced in the latest forecasts calling for mild weather for the first quarter of 2003. The January contract took the selling squarely on the chin, dropping nearly 44.3 cents off its high for the day and 23.1 cents off Wednesday’s close to finish at $5.047. In doing so, it settled beneath the February 2003 contract ($5.073) for the first time.

With most markets either in or entering a thawing-out phase, a price retreat from the worst siege of weather in the overall mild winter of 2001/02 was in order Tuesday. Declines between about a nickel and a little more than a dime were most common. The biggest ones came at the points that had been soaring the day before: Northeast and Florida citygates. A minor OFO kept California numbers mostly flat.