Temperatures

Northwest Pipeline urged shippers to refrain from drafting anywhere on its system. Cool temperatures in the Pacific Northwest, supply shortfalls and excessive drafting has reduced linepack throughout the system, the pipeline said. All balancing must receive prior authorization from Williams Gas Pipeline-West.

Natural gas prices for Columbia Gas of Ohio’s customers are expected to drop along with the temperatures, the company said Thursday. Beginning in November and through January billings, Columbia will reduce its gas cost to 48 cents per 100 cubic feet — a drop of 20% over last year.

Despite forecasts calling for moderating temperatures this week, natural gas futures were higher Friday after traders were once again unsuccessful punching prices beneath what has become a very tough level of support in the $2.90-95 area. With that the September contract was treated to its highest closing price in more than a week, settling 8.4 cents higher at $3.04. Estimated volume was extremely weak, as only 40,115 contracts were estimated to have changed hands.

The near-term risk of more natural gas price erosion due to mild temperatures, high storage levels, the economic downturn and higher production levels across the nation led top industry analysts with Salomon Smith Barney (SSB), Lehman Brothers, ABN-AMRO, Simmons & Co. International, and Merrill Lynch to downgrade their 2002 stock price forecasts for several U.S. exploration and production (E&P) companies last week. Many of the same analysts also decided yet again to lower their respective 2001 and 2002 natural gas wholesale price outlooks.

As natural gas storage levels recently erased the long-standing deficit when compared to last year’s levels, turning it into a surplus for the first time since January 2000, analysts are being forced to take another look at their natural gas price forecasts for the remainder of 2001 and for 2002.

Conservation, cool temperatures and more long term contracts have pressured power prices lower in California to the point where generators “are having to compete for first time in months to sell us energy,” Ray Hart, deputy director of the California Department of Water Resources (DWR) said Thursday.

Noting the mild temperatures across the country, favorable arbitrage spreads and “ambitious distributor refills,” the industry continues to “inject a significant amount of natural gas into storage,” said UBS Warburg analyst Ronald Barone last week in his weekly research note. Even though national supplies now stand at 958 Bcf versus 1,117 Bcf a year ago, Barone said he expects to see the storage deficit drop and perhaps post a surplus by this summer.

Noting the mild temperatures across the country, favorable arbitrage spreads and “ambitious distributor refills,” the industry continues to “inject a significant amount of natural gas into storage,” said UBS Warburg analyst Ronald Barone last week in his weekly research note. Even though national supplies now stand at 958 Bcf versus 1,117 Bcf a year ago, Barone said he expects to see the storage deficit drop and perhaps post a surplus by this summer.

It appears the weatherman will be giving most of the U.S. a break this summer, with moderate temperatures and less of a hurricane threat than the last five years.