Spot

Interest in gas from the Sable Offshore Energy Project (SOEP) isgrowing in the Northeast. BP Amoco said it will market some of theproduction, and a distribution franchise has been awarded to servethe province of New Brunswick. Long-term gas and oil supplies fromAtlantic Canada could play a major role in meeting Northeastdemand, according to a recent study.

Wednesday marked the first time in a week that double-digitmoves were nowhere to be found in the cash market. Most pointsregistered small gains of 2 to 5 cents, feeding off a strongfutures screen and a bullish American Gas Association (AGA) storagereport of a 26 Bcf injection.

The natural gas futures market made it a ‘perfect ten’ yesterdayby trading within a tight 14-cent range for the tenth consecutivetrading session. The August contract showed promise early, racingout to a strong start and posting a $2.239 high. That, however,would be the best the market could do Tuesday. It then wilted underselling pressure in the afternoon. The prompt month finished at$2.198, down 0.9 on the day.

Monday’s spot trading yielded a hodgepodge of results, with hotweather in both the East and West being the primary market force.Despite an appeal for electricity conservation in New England asregional power utilities strained to meet demand, gas prices thereshowed little change. But a western heat wave had quotes rangingfrom flat to more than a nickel higher.

Natural gas is one of the factors lurking behind the scenes ofLong Beach’s continuing quest to buy a section of SouthernCalifornia Edison Co.’s power distribution system within its cityborders. The city recently rejected an offer by Edison that wouldhave ended the municipalization campaign. At least part of thereason for the city’s resolve is the likelihood it will be a majorend-point for large new gas loads. But that appears to be a smallpart of a much larger scheme behind the city’s recent activities.

Natural gas is one of the factors lurking behind the scenes ofLong Beach’s continuing quest to buy a section of SouthernCalifornia Edison Co.’s power distribution system within its cityborders. The city recently rejected an offer by Edison that wouldhave ended the municipalization campaign. At least part of thereason for the city’s resolve is the likelihood it will be a majorend-point for large new gas loads. But that appears to be a smallpart of a much larger scheme behind the city’s recent activities.

It has been a good spring for bull traders at Nymex. SinceFebruary 26, the now-spot June contract has rallied nearly 70 centsto trade as high as $2.40 last week. But just as constructivetechnicals and low storage injection figures seemed to point tocontinued strength, the market spiraled lower Thursday and Friday.And while long liquidation spurred by the bearish one-two combo ofnuclear units coming back on line and moderating temperaturesacross the country were as good as reasons as any for the marketturning lower, traders remain divided as to the price directionheading into the summer. June finished the week mixed at $2.273, 2pennies above its close from the prior Friday, but 2.2 cents lowerfor the day.

California’s experimental nonprofit electric transmission gridand wholesale spot power market operations – the Independent SystemOperator (ISO) and Power Exchange (PX), respectively – are clearlyworking toward becoming larger, multi-state regional operations,according to officials who marked the one-year anniversaries ofboth organizations March 31. A proposed new California law (SB 96)would make it easier for the state to enter compacts with otherwestern states to begin to form the regional power operations.

Feeding off late gains notched by the expiring April contractMonday, May kicked off its campaign as the spot month at Nymexyesterday by continuing higher in active trading. And whereas Aprilcontract made its mark in a late short squeeze, May was promptedhigher throughout the day by a steady stream of commercial andspeculative buying. Several sources also pointed to buy-stoporders, which were triggered as the market moved through the$1.93-95 range as a reason for the strength. May finished up 9.5cents at $1.978.