Slow

After plunging almost a dime lower in response to alarger-than-expected storage injection Wednesday afternoon, thefutures market shuffled sideways yesterday in ahurricane-abbreviated trading session. Traders were unable to gleanmuch fundamentally positive out of a natural gas market that isfaced with mild temperatures and little or no hurricane activity inthe wake of Floyd. The October contract finished at $2.546, down8.2-cents from Wednesday’s close.

Everyone seems to be “joining the slow club,” one sourceremarked Wednesday as the last day of June futures trading onlynudged June baseload and the day-trading markets slightly higherfrom the holding patterns established Tuesday. Today will be muchmore active, he said, because the Nymex closes early Friday due toMemorial Day, and time is running out to get deals done.

This week’s general price downturn almost came to a haltWednesday, but mild softness remained the norm for most points.Quotes tended to range from flat to down about a nickel. Marketareas were getting colder but not by much, sources said, and thatwas outweighed by further softness in futures. With little toinfluence it, trading activity remains on the quiet side, theysaid.

The Energy Information Administration (EIA) in its Annual EnergyOutlook 1999 released Tuesday is forecasting only a gradual 0.8%average annual rise in natural gas wellhead prices through 2020.Prices will go from $2.23/Mcf in 1997 to $2.68 in 23 years later.

Despite the advent of retail gas and electric competition instates such as California, Georgia, Ohio and Pennsylvania,UtiliCorp United officials do not regret their decision earlierthis year to shelve retail commodity marketing and disband theEnergyOne partnership with PECO Energy. The outlook for retailcompetition is still quite bleak, UtiliCorp Chairman Richard C.Green, Jr. said last week at a press briefing in Washington, D.C.The status of the retail market has not changed, and regulators andlegislators still appear headed in the wrong direction.

A slow and undistinctive trading session Thursday yielded amixed bag of prices that leaned mostly to the slightly softer side.The small declines tended to occur mainly at Eastern points, whilethe West generally was flat to a little higher. Sources continuedto chant the litany of “no weather, no demand.”

California lawmakers, responding to pressure from utilities andutility employee unions, have enacted a law outlawing customerchoice for residential and small commercial natural gas customersuntil at least the year 2000. The new law (SB 1602) passed in thewaning days of the 1998 legislative session and signed by Gov.Wilson Tuesday prohibits the California Public UtilitiesCommission, which pushed through restructuring of the electricindustry, from moving ahead with gas unbundling . Between now and2000 the CPUC can continue to investigate and talk about choice forsmall customers, but it cannot take any actions without gettinglegislative authorization.

Expect weakening prices and slow gas demand growth this year,the Energy Information Administration said last week in a sharpdeparture from earlier forecasts. Its July Short-Term EnergyOutlook is based on first-quarter data that show a “surprising”5.1% decline in industrial gas use compared to the same period in1997, despite a 3.4% increase in industrial output by gas-intensivemanufacturers.

The cash market took something of a breather Tuesday followingthe breathtaking uprising that began the week. Several pointscontinued to rise but by decidedly smaller amounts than on Monday.Flat to slightly higher was the general rule, but Rockies numberswere falling as supply outages neared an end and mild weather inthe Western U.S. continued to depress demand. Malin and theSouthern California border also fell by small amounts.