Slips

The outlook for the natural gas and power industry bears a strong resemblance to the markets in the early 1990s, according to a report issued by Credit Suisse First Boston Equity Research last week. The key difference is the current valuation for the Standard & Poor’s 500 Index is 10% higher than it was in 1992, while the valuation for the natural gas and power sector is 30% lower, it said.

For the third session in a row Wednesday, natural gas futures were fast out of the chute as traders pressured the market to a higher opening trade. However, in contrast to Tuesday when prices held strong throughout the session, Wednesday was another down-day on the charts as non-commercial sellers re-entered the fray. The August contract finished at $2.841, down 2.2 cents on the day, and in the lower half of its 16.5-cent trading range.

For the third session in a row Wednesday, natural gas futures were fast out of the chute as traders pressured the market to a higher opening trade. However, in contrast to Tuesday when prices held strong throughout the session, Wednesday was another down-day on the charts as non-commercial sellers re-entered the fray. The August contract finished at $2.841, down 2.2 cents on the day, and in the lower half of its 16.5-cent trading range.

With construction still ongoing Friday on three of its four major transmission upgrades that will collectively add 375 MMcf/d of capacity on its transmission pipeline system, Southern California Gas Co. acknowledged its modified implementation plan for its in-state pipeline and storage restructuring program will be on track by the fall when crunch time comes. Even so, the detailed steps outlined in a filing with state regulators last month indicated that it will be next year before the new “comprehensive settlement agreement” plan is fully completed.

Bulls and bears eyeballed each other across the gas futures pit Monday, but in the end neither group really flinched. The March contract ended the day down a couple pennies with a lower low and a slightly lower high compared to Friday. March closed the day at $2.117, down 2.1 cents. Without a substantial change in market fundamentals, a standoff appears likely.

The downtrend continued Monday morning at the majority of points, with many places down a more than a dime from Friday averages. However, there was a late turnaround in some regions, including West Texas, the Midcontinent, Gulf Coast and Northeast markets, which may set the tone for trading Tuesday and Wednesday until the AGA storage report is released. Despite plenty of time to prepare last week, the colder weather appears to have caught some players off guard.

Feeding off Wednesday’s strong close, natural gas futures spikedhigher yesterday morning, but ultimately finished lower in anextremely quiet session. After notching a new life of contract highat $2.90 shortly before noon (EST), April was hit with light profittaking which demoted the contract to $2.851, a 1.5-cent loss forthe session.

Whether it was too much holiday turkey or possibly just a postY2K letdown, the natural gas futures market began the year insomewhat of a funk last week as traders showed an unwillingness topush prices very much on either side of unchanged.

Futures traders were unable to maintain upward momentum earlyyesterday after an initial push above the 40-day moving average toa high of $2.715. January futures fell back sharply in the morningand then traded sideways throughout the rest of the day to end down2.6 cents at $2.629. February lost 1.7 cents to settle at $2.609.The 12-month strip only lost eight-tenths of a cent.