Temps

Due to record setting October temperatures in Minnesota that were over 40% colder than average and continued increases in the wholesale cost of natural gas, CenterPoint Energy Minnegasco (CEM) said customers can expect to see significantly higher heating bills during this winter.

Under the weight of an increasingly negative technical outlook and on the heels of new forecasts suggesting moderating weather is ahead, natural gas futures continued lower Friday, as traders liquidated long positions established during the market’s recent run to $4.42.

Cash prices rose a nickel or more at most locations on Wednesday, with most Gulf Coast points up 5-8 cents, Midcontinent and Midwest quotes slightly higher and some points farther West with double digit increases. Although many industry observers were walking around scratching their heads, a few sources noted that heating demand is picking up and the continuing production shut-ins in the Gulf are likely to significantly reduce storage injection volumes.

Cool breezy weather across much of the nation, new predictions of a weak hurricane season and expectations of another relatively large storage injection despite last week’s record heat were some of the major fundamental factors that helped the bears pressure the September gas futures contract down 5.6 cents Wednesday to $2.660.

The warm winter in the East is showing up in financials from distribution companies up and down the East Coast, but at least one of them will be collecting on its weather insurance. New Jersey-based NUI Corp., Washington, DC-based WGL Holdings Inc. and North Carolina-based Piedmont Natural Gas Co., said warmer than normal temperatures in their natural gas service areas and the current economic recession are having an effect on earnings in 2002.

Armed with bearish technical data and fundamental news, traders at the New York Mercantile Exchange wasted little time yesterday as they pressured natural gas futures back below the psychologically important $3.00 mark. Selling was seen from the outset Monday, as traders initiated the daily session with a whopping 14-cent, gap-lower open on the daily chart. The December contract never recovered, sifting lower through the morning only to move sideways during the afternoon. The prompt month closed at $2.922, down 32.6 cents for the day.

Expectations of another massive weekly storage injection figure — confirmed by AGA at 117 Bcf for the week ending June 1 — combined with milder weather and high line pack, put significant downward pressure on cash and futures prices yesterday. Most eastern points were down 20-30 cents, while California prices into PG&E at Topock dipped below $3 in response to a high inventory operational flow order. SoCal-Topock prices dropped more than a dollar.

Boosted by soaring cash prices and cooler temps both outsidetraders’ windows and in the latest weather forecasts, natural gasfutures were higher Monday after gains registered in the Sundaynight Access trading session were validated by a gap higher open.The December contract was the largest beneficiary of the Sundayevening-Monday morning buying frenzy, finishing up 24.2 cents at$5.698. Meanwhile the back months lagged considerably, evidenced bythe 12-month strip, which only advanced 8.2 cents to $4.826.

Natural gas bulls never got a chance yesterday as traders shedlong positions in sympathy with falling cash market prices and inanticipation of warming temperatures this week. By the time thedust had cleared and the orders were tabulated, the March contracthad slipped a cool 18 cents lower, tumbling beneath several keylayers of support and easily negating last Friday’s impressivegains.