Ride

Natural gas traders were greeted yesterday morning by somethingseldom seen in recent years – a serious blast of below normaltemperatures in the key gas-consuming Northeast U.S. But evensub-freezing temperatures and gale force winds, which are expectedfor much of the eastern seaboard today, were not enough to overcomethe deleterious effects of forecasts calling for a quick return toabove-normal temperatures by the weekend. After an early buyingsurge failed to punch through $2.42, the January contract cameunder a heavy wave of selling that propelled prices lower to finishat $2.304, a 4.8-cent decline for the day.

For the second day in row Wednesday, natural gas futures werelimited to small gains amid a quiet trading session. The Februarycontract finished up a penny at $1.827 in the regular tradingsession.

Bombing Iraq seemed as reasonable an explanation as any for whymost cash markets were rising in the neighborhood of a dimeWednesday. Weather was getting a little colder but still relativelymild for this time of year, so it’s not like there’s any big surgein gas demand, a marketer said. The AGA storage report of 49 Bcf inwithdrawals last week, which came too late to affect Wednesday’strading, was approximately in the middle of most expectations andthus neither bearish nor bullish.

Fueled by what one veteran trader called one of the mostdramatic price moves in the history of the natural gas market,futures prices rallied Monday as the prompt January contractsettled up 12.3 cents to $2.101. But that daily change paled incomparison to the enormous advances seen in the cash market wheredaily gains registered more than a half-dollar for many pipes.Forecasts calling for cooler temperatures for most of the countryand undervalued cash prices were reasons for the market strength,sources agreed.

Cash prices started the new week on an upward note, largelymotivated by an early Nymex run-up and forecasts of colder weatherfor some major market areas. Except for Northeastern markets, spotprices at most trading points registered gains ranging anywherefrom 1 to 6 cents in the Gulf Coast area to more than 20 cents inCalifornia markets.

The $2.08-10 level has been a magnet for November futures pricesthis week, and yesterday was no exception when buyer and sellersmatched up just about evenly to produce a $2.095 settle. Sourcessaid strong selling above $2.10 was enough to thwart the earlymomentum produced from follow-through buying carried over from theWednesday evening Access session. Despite the relatively narrow8-cent trading range, estimated volume registered a hefty 62,079.

Calling his own merchant underground natural gas storage fieldin northern California a “done deal,” a Calgary-based AlbertaEnergy official speculated that any competitors in developingnonutility, market-based storage “have quite a bit of work to do”to get a competing facility up and running. It was an indirectreference to a smaller, competing facility whose backers say theywill file with California regulators Oct. 1. (See Daily GPI, Sept.21)

There was no calm before the storm on Thursday as the futuresmarket experienced another day of volatile, choppy trading astraders turned to televisions in trading rooms across the countryfor the direction and strike probabilities of Hurricane Georges.The October contract bounced back and forth throughout the tradingsession as the market digested the imminence of supply shut ins.That prompted the spot month to move 4.8 cents higher yesterday,settling at $2.179.

A skyrocketing futures screen took cash along with it Monday,with increases of up to a dime or more occurring at many pricepoints. The surge carried some Midwestern citygates at Michigan andChicago back to the plus side of $2 for the first time since earlyAugust.