After January natural gas futures failed to stay below the psychological $7 level on Tuesday, traders made sure the move to sub-$7 levels stuck on Wednesday. The contract spiraled to a low of $6.760 before settling at $6.769, down a significant 31.4 cents on the day.
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After being stuck within an $11.030 to $12.070 range for 11 consecutive regular sessions, December natural gas broke to the upside Wednesday as a cold front reached the East and petroleum futures prices recorded significant gains. December natural gas ended up settling at $12.329, up 76.6 cents from Tuesday’s close.
As the prospects for Congress passing a broad energy bill this year grow dim, Reps. Edward Markey (D-MA) and Randy “Duke” Cunningham (R-CA) last Wednesday introduced separate legislation aimed at bolstering the reliability of the electricity grid and easing run-away energy prices.
A pig is stuck in the 527A-700 Line due to a plug that formed in the line, Tennessee said Monday. It had hoped to work the pig free by last Friday. The plug must be dissolved and removed before the line can return to service; the outage is expected to last seven to 14 days. Until the pig is recovered, physical flow at the South Pass 57A, South Pass 77A and West Delta 109 meters offshore Louisiana has been suspended.
Confronted with bullish near-term forecasts and bearish longer-lead weather outlooks, natural gas futures traders chose to side with the latter Tuesday as they quickly took back a lion’s share of Monday’s 12-cent advance. By virtue of its 9.4-cent decline and $4.226 close Tuesday, the January contract again rests near the bottom of the $4.16-48 trading range. The same range has bounded the market’s price moves since Nov. 18.
Despite a second straight day record electricity demand, and spiking New York City physical gas prices, natural gas futures traded quietly sideways Tuesday, as neither bull nor bear was willing to influence a move in either direction. On its first day as prompt contract, September slipped 1.4 cents to finish at $2.891, just 0.1 cents above its opening trade for the session and smack-dab in the middle of its $2.85-93 trading range. At 86,242, estimated volume was moderate to light.
What a difference a week can make. For the third time in fourdays the April futures contract tested, but was unable to breakbelow stubborn support in the $2.71-74 area, leaving traders littlechoice but to bid up futures despite warming temperatures andfalling cash prices. The April contract finished up an impressive5.3 cents at $2.847. This advance came on the heels of last week’sprice activity, which saw the April contract twice test equallystubborn resistance at the $2.88-90 level. Aside from one falsebreakout to $2.67, the spot contract has consolidated within the$2.70-90 area since March 1.
“This gas market is stuck in neutral gear,” lamented a westerntrader Monday. “We’re seeing about the same prices as on Friday, soyou could almost ‘cut and paste’ those notes into today’s report.”Sure enough, except for a moderate spike at Transco Zone 6-NYC thatwas retreating in late action, Monday’s quotes maintained thepredominantly flat market that has prevailed since last Tuesday.
Acquisitive Calpine Corp. stuck to its strategy last Friday,saying it agreed to buy 80% of the Minneapolis, MN-basedCogeneration Corp. of America (CGCA) for $145 million. The proposedacquisition will increase Calpine’s gas-fired energy production to2,476 net MW of capacity, representing a 20% jump in production.Calpine expects to complete the deal in January.
Representing the latest curve on what has become a very windyroad, Southwest Gas announced Wednesday it is reviewing SouthernUnion’s revised merger offer even though it already entered into amerger agreement with Oneok earlier this week. With two offers onthe table, Southwest Gas has said it will not comment further onthe subject until a decision is made, and industry analysts say thedecision will not be easy.