Surge

Driven in recent years by a surge of electric power plant construction that is only now subsiding, the accompanying boom in new natural gas pipeline projects and expansions is showing signs of exhaustion, according to a new report from Standard & Poor’s Ratings Services (S&P).

Riding the wave of a decidedly bullish storage report and a prompt-month futures contracts that settled above $5.00 on the previous day for the first time since late April 2001, prices wound up an already strong week with further advances at most points Friday. Only San Juan/Rockies numbers, which have frequently moved contrary to the overall market in recent weeks, succumbed to weekend softening.

Monday’s huge surge of cash bullishness came to a near-standstill Tuesday, and several NGI sources indicated they expect a gradual price slide to begin Wednesday. Other than moderate increases in the Northeast, Rockies/Pacific Northwest and California and stronger gains in Western Canada, most points were flat to less than a nickel higher Tuesday (a few scattered small declines also were part of the mix).

Quotes for Transco Zone 6-New York City deliveries soared as high as $7.50 Monday as Northeast electric utilities struggled to cope with high temperatures that generated heat advisories throughout much of the area. The heat sparked the PJM Interconnection grid operator to issue a plea for emergency supplies and sparked a run-up in Nepool (New England) and PJM-West power prices for Tuesday to averages of about $116/MWh in each pool, according to the IntercontinentalExchange trading platform. New York and PJM websites showed hourly prices spiking occasionally up to the $1,000/MWh price cap.

Spurred primarily by a fresh surge in futures, the cash market realized large increases again Monday, although most of them were smaller than those on Friday. Gains ranged from about a nickel at a couple of Rockies points to more than 40 cents at the Florida citygate; a majority were between a dime and a quarter.

Buoyed by a larger-than-expected 137 Bcf storage withdrawal figure, natural gas futures probed the upside Wednesday afternoon as traders continued to shy away from the short side of the market. After working its way lower throughout most of the morning, February turned higher just before noon EST when it became apparent that sellers would not be able to keep prices below the $2.30 level. The prompt month finished the session in an undeniably bullish manner, carving out a new two-week high and closing 10.3 cents stronger on the day at $2.394.

Third-quarter financial and operating results for natural gas and power companies indicate a continued — but slowing — surge in income increases from non-regulated activities, compared to earlier in the year, according to a survey by Energy Performance Review (EPR). While 3Q earnings for natural gas and power marketing and power generation were up about 50% from the same period last year, nine-month earnings, led by first quarter results, were up closer to 75%. Natural gas distribution earnings showed a greater seasonal loss this third quarter, compared to last, while electricity distribution gained slightly over last year’s 3Q.

Third-quarter financial and operating results for 118 natural gas and power companies indicate a continued, but slowing surge in income increases compared to earlier in the year from non-regulated activities, according to a survey by Energy Performance Review (EPR). While 3Q earnings were up about 50% from the same period last year, nine-month earnings, led by first quarter results, were up closer to 75%.

The cash market again seemingly defied some of the laws of economic gravity Tuesday by rising about 20 cents or more at most points. And once again several traders were baffled at the continuing price strength in the face of pitifully few visible means of physical support.