Seasonal

In Tuesday’s trading for flows on the first day of November, prices were down by double-digit amounts at all points. Seasonal temperatures in many areas and a prior-day screen drop of 41.1 cents were primarily responsible for the bearish cash market.

Just when it looked like futures had carved out its seasonal bottom and set their sights on higher prices, the June contract on Wednesday — two days short of expiration — broke back below $6 in convincing fashion. While the prompt month didn’t carve out a new low for the move, it recorded a $5.940 low for the day before inching higher to settle at $5.964, down 29.4 cents from Wednesday.

Working gas levels ended the withdrawal season during the week ended March 25 at 1,239 Bcf, or about 19% higher than the average seasonal low point over the past 11 years, according to Energy Information Administration data. That will mean more gas to meet summer power demand, but it probably won’t be enough to put much downward pressure on prices, according to two industry experts.

While current gas storage capacity may be adequate to meet seasonal demand, increasing gas price volatility shows a need for more capacity and there are several actions the Federal Energy Regulatory Commission (FERC) could take to speed up development, FERC staff said in a presentation last week.

Led by an 18% increase in nonregulated gas, oil and natural gas liquids production, a 14% rise in realized natural gas prices, and an 18% increase in nonregulated gas gathering volumes, Questar Corp. posted 2Q2004 net income of $42.6 million, or $0.50 per diluted share, compared with $20.3 million, or $0.24 per diluted share, in the comparable 2003 period.

Expectations for adequate natural gas storage supplies and the approaching seasonal drop in crude demand will likely lead to a decline in both commodities and the exploration and production (E&P) stocks in the near term, but the outlook long term remains positive, according to analysts with RBC Capital Markets.

Expectations for adequate natural gas storage supplies and the approaching seasonal drop in crude demand will likely lead to a decline in both commodities and the exploration and production (E&P) stocks in the near term, but the outlook long term remains positive, according to analysts with RBC Capital Markets.

Pipeline affiliates Texas Eastern and Algonquin noted that while forecasts were for more seasonal conditions in their market areas over the weekend, they would continue to have limited operational flexibility. Texas Eastern said it would have limited due-shipper imbalance gas available Saturday, but not in the M-3 zone. It added that due-shipper gas in upstream zones could not be used to supply M-3 markets.

Caught between forecasts calling for another blast of cold air and its seasonal inclination to move lower, natural gas futures shuffled sideways Friday as neither bull nor bear could get much of anything going. The market finished mixed, with gains in the front months contrasting with losses in the back of the strip. The new prompt contract March finished at $5.605, up 2.2 cents for the day and 14 cents higher for the week. Weighed down by losses in the winter 2003/04 contracts, the 12-month strip advanced only 1.1 cents to $5.016. At just 66,757, estimated volume was light and reflected the market’s lack of direction.