Topping

Temperatures showed no signs of abating Monday as the heat wave of the past two weeks moved forward with readings topping 100 degrees in a number of regions. As a result, September natural gas futures jumped higher in Sunday night’s Access trading session and kept the momentum rolling into Monday. The contract settled the day at $8.211, up $1.027 from Friday’s close.

Topping the first Federal Energy Regulatory Commission meeting in the new year on Jan. 19 is the Commission’s proposed anti-market manipulation rule (RM06-03) initiated last fall using the broader authority provided by the Energy Policy Act of 2005. Also on the published agenda are potential rehearing orders on two northeastern LNG projects, and a look at the Commission’s negotiated rate policy (PL02-6).

“Hurricane Katrina was the most destructive ever to strike the U.S.,” topping off a hurricane season that began as the most active on record, and a summer that will go into the record books as the tenth warmest, the National Oceanic and Atmospheric Administration (NOAA) said Thursday. Around the globe temperatures from June 1 through Aug. 31 were the second highest on record.

With gas futures prices topping out at $7.70/MMBtu Thursday, it’s no secret that there is a natural gas supply problem in North America. Consultants at Energy and Environmental Analysis Inc. (EEA) say that problem will get even worse before it gets better, with Henry Hub gas prices averaging $7.50 all of next year and $8.50 in 2007. The current 2007 futures strip is about $1.00 less than that.

With its interest expense growing by $100 million last quarter and topping the $1 billion level overall, Calpine Corp. received its latest bids Friday from a short-list of prospective buyers for its 1,200 MW Saltend power plant and a cogeneration facility in England, which may be just the beginning of a wave of asset sales, including some in North America, CFO Bob Kelly said.

With shoulder-month natural gas futures prices topping $6 on Monday, it’s clear the bulls are winning the market tug-o-war. But some buyers charge that has happened through a propaganda campaign waged by producers and analysts who have exaggerated the low gas supply situation and the need for demand destruction.

Northeast citygates soared Monday, topping out at $9.00 in New England. That seemed natural, considering that the Northeast and Midwest were experiencing their worst siege of cold so far this winter, and chilly temperatures dominated most of the weather picture elsewhere.

Northeast citygates were solidly topping $6 Monday while those in the Midwest edged their way above $5 in a continuing show of strength by the cash market. Only the Rockies lagged behind with minuscule gains, while the rest of the market measured its advance in double digits that exceeded 20 cents in most cases and approached a dollar at Transco Zone 6-New York City.

North American natural gas markets stand warned that western Canadian supplies either have or soon will reach a turning point where they peak then start to run down, and the nation’s top transporter is crafting import projects.