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Almost as fast as they had gone up Tuesday, cash prices headedback down Wednesday. In one of the quickest hit-and-run operationsever mounted on Gulf of Mexico production, Earl achieved hurricanestatus but was already leaving offshore platforms behind afterveering sharply eastward overnight. While the storm appeared to beheaded into Florida’s Panhandle, workers were returning toplatforms off Louisiana and Texas and the estimated 8 Bcf/d ofshut-in gas gradually started to flow again.

It has been a long time since bullish traders have had much tosmile about in the natural gas market. Both fundamentals andtechnicals have exerted their influence on the market for most ofthe summer, and, in doing so, have forced natural gas prices todepths not witnessed since 1995. However, Monday morning traderswere greeted with two potentially bullish developments — onetechnical in nature and the other fundamental — that prompted ashort-covering rally enabling the market to eat away at some oflast week’s price loses. The October contract led the way,advancing 8.8 cents to settle at $1.752 yesterday.

The futures market wasted little time in continuing higherMonday, gapping higher on the open en route to a technicalcorrection that left the September contract up 16.4 cents to settleat $2.041. Sources said Monday’s rally was follow-through buying onthe heels of Friday’s strong close coupled with “nervousspeculators” covering sizeable short positions. Estimated volumeconfirmed the active trading with an estimated 83,239 contractschanging hands.

The Oklahoma Corporation Commission at press time Friday was toissue its rule for upstream unbundling of the Oklahoma Natural Gas(ONG) system. The unbundling plan calls for ONG to remain aregulated utility providing distribution service. However, itsexisting services and assets upstream of the citygate – gas supply,gathering, storage, and transportation – would be separated andbrought under a new company, ONEOK Gas Transmission (OGT). Inaddition, ONG will seek upstream services through competitive bid.

The futures market wasted little time continuing lower yesterdayadding to losses registered Wednesday evening following the releaseof the weekly AGA storage report. That report, showing alarger-than-expected 93 Bcf injection gave storage bears somethingto chew on. The August contract opened near its high then tumbled9.9 cents to settle at $2.132 in active trading yesterday.

If you thought a new pooling system on El Paso Natural Gas wouldbe approved in time for summer vacation, it looks like you may haveto sweat it out for another season. After months of hair pullingscrutiny and debate, FERC has decided to reject El Paso’s March 16filing for scheduling gas pooling transactions on its system andconvene yet another technical conference on the complex matter.

The capacity of natural gas pipelines reached an all-time highof more than 84 Bcf/d or 30.7 Tcf/year in 1997, according to areported released Friday by the Energy Information Administration.”This represents a 15% increase over installed capacity reported in1990,” EIA said in a report: “Deliverability on the InterstateNatural Gas Pipeline System.” Flowing gas increased 24% between1990 and 1996, resulting in a record high 75% utilization rate,while U.S. consumption grew by 17%, fed by a doubling of imports.U.S. production increased 6%.

Frustrated by the pace of electric competition’s development inCalifornia, Enron has stepped out of the battle for residentialcustomers, at least for the time being. Enron blamed severalfactors for its decision. Consumer response has been disappointing,and state regulations put a crimp on the profitability of thebusiness.

The May Nymex contract took time out to lick its wounds Tuesdayby gaining 2.2 cents to settle the day at $2.501. Several longtraders were concerned that May would add to its massive 17.8 centloss turned in on Monday, but good buying from the outset kept Mayat either side of $2.50 throughout the session.