Strong

Demonstrating its intent to build a strong production portfolio,Peoples Energy recently announced a purchase of 50% interest in SanJuan Basin coalbed methane producing territories from KochIndustries for $47 million. The purchase not only introduces theChicago-based company as a player in the basin, it also doubles theamount of its fledgling production business from 15 MMcf/d to 30MMcf/d.

Demonstrating its intent to build a strong production portfolio,Peoples Energy recently announced a purchase of 50% interest in SanJuan Basin coalbed methane producing territories from KochIndustries for $47 million. The purchase not only introduces theChicago-based company as a player in the basin, it also doubles theamount of its fledgling production business from 15 MMcf/d to 30MMcf/d.

Boosted by another morning of strong cash prices, the futuresmarket trudged higher Wednesday as traders gained optimism thatprices may have found a bottom. But that speculation could be a bitpremature because as soon as bulls finished pushing the Januarycontract 1.7 cents higher to its $2.288 settlement the bears tookit lower in after-hours trading. Even a bullish storage report didnot help to dissuade the late selling pressure.

After a strong opening failed to attract the buying necessary tofill the chart gap up to $2.52, the natural gas futures marketsagged Friday, as traders turned once again to the deleteriouseffects of above-normal temperatures in both short and long rangeforecasts.

The cash market made a strong rebound Monday from the weekend’sprice plunge as nearly every point rose by 15 cents or more. Inmost cases the gains did not recover all of the price territorythat had been lost Friday. However, the Northeast—one of the fewregions seeing any weather close to resemblingwinter —didmanage to make up for just about all of Friday’s citygate declines.

A veteran natural gas reserve and production expert has issued abearish warning to natural gas market observers: 1998 total reserveadditions could jump as much as 3 Tcf from 1997’s figure to between22 and 23 Tcf. That would be well above the range of 14.9 to 20.2Tcf over the last nine years. With 1998 production estimated atabout 19 Tcf the forecast adds up to reserve additions exceedingproduction by 116% to 121%.

Fueled by strong cash prices, a constructive technical picture,and lingering storm concerns the natural gas futures market wasquick out of the gates yesterday as traders lifted the market toits highest point in over a month. However, the buying pressuredropped off as November prices crossed the $3.00 threshold, whichprompted participants to trim gains into the close. After notchinga $3.03 high, the November contract finished at $2.97, a 4.3-centadvance on the day.

Bolstered by strong cash prices and constructive technicals, thenatural gas futures market bubbled higher yesterday as locals bidprices higher in light Columbus Day trading. And by finishing at$2.825, the November contract fell just a penny short of its $2.835high for the day and several cents below key resistance at the40-day moving average. Estimated volume was light, with just 60,947contracts changing hands.

Cash prices rode a soaring October futures contract,stilll-strong power generation demand and the remote threat ofTropical Storm Floyd to higher levels again Thursday. Gains wereslowing down from Wednesday’s pace but ranged from 2-3 cents at afew points to about a dime at many of them.