Slip

Exports to the United States are holding firm as Canadian producers steadily accelerate natural gas drilling to compensate for anticipated depletion of aging reserves.

Gas production shut ins due to Hurricane Ivan rose to more than 6 Bcf/d, according to a mid-day tally Wednesday of 65 companies by the Interior Department’s Minerals Management Service (MMS). But those production losses barely phased the weak natural gas cash and futures markets. Cash prices were down another 5-15 cents in regions other than Gulf Coast Louisiana and the Northeast, and most Louisiana points were flat to up only a nickel.

Most spot market points lost 5-15 cents on Thursday in response to the National Hurricane Center’s fluctuating storm track forecasts for Hurricane Ivan, which according to the 5 p.m. EDT prediction, now is expected to run up the far eastern Gulf of Mexico, parallel to the Florida west coast, and make landfall on the Florida panhandle Tuesday night.

Western Gas Resources shares tumbled 7% last Thursday and another 5% on Friday to $28.38 after the company reported a 33% decline in quarterly net income to $14 million ($0.19/share) compared to $20.9 million ($0.28/share in 2Q2003) because of one-time special charges for redemption of 10% senior subordinated notes ($6.7 million) and the cost ($7 million) of settling false price reporting charges with the Commodity Futures Trading Commission.

Western Gas Resources shares tumbled 7% Thursday to $30.35 after the company reported a 33% decline in quarterly net income to $14 million ($0.19/share) compared to $20.9 million ($0.28/share in 2Q2003) because of one-time special charges for redemption of 10% senior subordinated notes ($6.7 million) and the cost ($7 million) of settling false price reporting charges with the Commodity Futures Trading Commission.

Despite fresh forecasts suggesting this summer could be a hot one, the natural gas futures market turned lower Friday as traders took profits after failing to break above stubborn overhead resistance.

After posting a 25-cent rally Thursday, the natural gas futures market cooled its jets Friday as almost equal amounts of profit-taking and commercial buying entered the trading pit. At the close the sellers had exerted a little more influence, resulting in a 4.7-cent decline and $5.596 settlement in the prompt April contract.

With traders unwilling to bet too heavily ahead of the release of fresh inventory data Thursday, the natural gas futures market continued its sideways price action Wednesday. By virtue of the modest mid-morning sell-off, bears were able to claim the day as a victory, with April prices slipping 4.1 cents to close at $5.397.

Natural gas futures Wednesday remained locked in a battle between the competing forces of fundamental bearishness and technical bullishness. Buyers were the first to exert their influence Wednesday, propelling the prompt month to a $4.90 high in the first 35 minutes of trading. Bears battled back, however, and rerouted the market to the downside ahead of Thursday’s release of fresh storage data. December futures closed at $4.738, down 12.7 cents for the session.