Setback

Natural gas futures suffered their first major setback in five trading sessions Tuesday as commercial and local traders took profits in concert with weakness in the nearby crude oil pit. In contrast to Monday’s session, which climbed nearly a dime in the last 30 minutes of trading, Tuesday’s natural gas trading session saw losses ahead of the close as traders liquidated positions in preparation for the September expiry Wednesday. The prompt month completed its penultimate trading session at $3.483, down 13.4 cents on the day.

Mexico’s Supreme Court dealt a setback to President Vicente Fox’s plan to promote private generation, voting 8-3 in April to reject changes in the country’s electricity laws. The court ruled that the modifications decreed last year by the Fox administration in an executive order are unconstitutional. Nationalists opposed to a growing movement toward private ownership in the country had challenged Fox’s May 2001 decree to promote private power generation development.

In what was a major setback for El Paso Corp., the Federal Energy Regulatory Commission Wednesday granted the request of the Office of General Counsel’s Market Oversight and Enforcement Section (MOE) for an expanded investigation into whether El Paso Natural Gas withheld transportation capacity from customers last winter in an attempt to drive up prices for natural gas delivered to the California border.

Producers suffered a major setback when the Bush administration, in a concession to Florida, announced last week that it will radically scale back plans to allow exploration and production activity in the oil- and natural gas-rich eastern Gulf of Mexico.

After overcoming an early setback, natural gas bulls stole the show for the third-straight session yesterday, as commercial traders propelled the futures market past several important technical levels. By virtue of its 12.2-cent advance and $4.301 closing price, the July contract has rebounded almost 60 cents from last Friday’s lows to notch a new three-week high.

Whitecap Energy System LLC — a proposed Midwest pipeline — was dealt a serious setback last week when one of its sponsors pulled out, placing the project “in abeyance” for now.

Whitecap Energy System LLC, a proposed Midwest pipeline, was dealt a serious setback last week when one of its sponsors pulled out, placing the project “in abeyance” for now.

After suffering a 9-cent setback late Wednesday afternoon,natural gas futures held their ground Thursday as traders electedto play it safe ahead of the holiday weekend. The May contractchecked to either side of unchanged, but ultimately finished inpositive territory, up 1.8 cents at $3.073. A narrow 4-cent tradingrange and a modest 54,989 in estimated volume were evidence of thequiet trade Thursday.

Oneok said last week that it remained steadfast in its desire tomerge with Southwest Gas, even in the face of a recommendation bythe Arizona Corporation Commission (ACC) staff to delay thetransaction. The Oklahoma-based company said the ACC staff decisionwas swayed by a “spurned suitor” and although no names arementioned, Southern Union Co. is the likeliest candidate for thespoiler role. Southern Union is bound by court order not to discussthe merger.