Talk

Following declines of nearly a dollar last week, the natural gas futures market shuffled sideways in lackluster trading Monday. With weather forecasts continuing to call for mild temperatures, bull traders had little on which to mount an offensive. Meanwhile, the possibility for a third-straight record-setting storage injection gas has bears looking for further price declines this week.

Concluding “Let’s talk about the Weather Week,” WSI Corp. and New York-based Weather 2000 chimed in Friday with their takes on what Mother Nature has in store for the Lower 48 over the next three months. While Weather 2000’s forecast tended to trend with forecasts released by Salomon Smith Barney and the National Weather Service for colder than normal weather through much of the country except the West, WSI’s differed in seeing warmer than normal temps across the northern tier.

Analysts at Raymond James said they aren’t buying the recent talk on Wall Street of gas demand deterioration. Although lighter storage injections suggest demand is down due to higher gas prices, analysts should remember that prices for competing fuels are even higher, they said.

Noting new federal energy regulators offered a “refreshing, problem-solving approach,” California Gov. Gray Davis said his 90-minute meeting in Sacramento Monday with FERC Commissioners Pat Wood and Nora M. Brownell was “both constructive and informative,” although there was no apparent resolution to the state’s nagging wholesale natural gas and electricity pricing problems.

As Mark Twain once observed, everybody likes to talk about theweather, and that was especially true in the gas trading communityTuesday. With the official calendar start of winter still more thana month away, it seemed like winter has already begun in almostevery region. The predictable effect was to keep both cash andfutures prices pushing higher, with the screen scaling previouslyunknown heights.

Although none of the major merchant generators in Californiawill talk about pulling back from the nation’s largest electricitymarket, they are not happy with some of the proposals that haverecently landed in the federal regulators’ lap advocating pricecaps and cost-based ratemaking, at least for interim periods.Several generators noted this week they are watching the situationclosely and intend to be heard at the federal level as well asamong the California energy policymakers.

Although none of the major merchant generators in Californiawill talk about pulling back from the nation’s largest electricitymarket, they are not happy with some of the proposals that haverecently landed in the federal regulators’ lap advocating pricecaps and cost-based ratemaking, at least for interim periods.Several generators noted this week they are watching the situationclosely and intend to be heard at the federal level as well asamong the California energy policymakers.

After much talk earlier in the week about how weak the cashmarket looks, it must have surprised some traders Wednesday to seeall but a few scattered points range from flat to as much as anickel higher. Between a neutral screen and no change infundamental factors, sources had trouble explaining why Tuesday’sprice skid came to such a quick halt only a day later. A marketersaid he wanted to suggest the “bears” had gone into hibernation,but it was too long before winter begins for that.

After having been told to drop dead by Texaco in a publicstatement released in June, Chevron now apparently is courtingPhillips Petroleum, a smaller prize but still a significantconsolation if accomplished. Reports surfaced over the weekend inthe British Sunday Times in London that Chevron was willing to paya 20% premium and that triggered a 5% spike in Phillips shareprices yesterday. The companies would neither confirm nor deny therumors, but Phillips shares closed up $2.81 yesterday at $56.56,well above its 52-week high. A 20% premium would put the purchaseprice near $17.2 billion. Chevron stock, meanwhile, took a slight88-cent dip yesterday to $92.12/share.