Trader

The Commodity Futures Trading Commission (CFTC) Wednesday charged Enron Corp. and Hunter S. Shively, manager of Enron’s central futures trading desk, with using EnronOnline (EOL) to manipulate the natural gas market, causing a spike in prices at the Henry Hub and affecting the futures price on the New York Mercantile Exchange (Nymex). The CFTC also said Enron operated EnronOnline as an illegal futures exchange.

Natural gas futures tumbled lower Thursday in what one trader described as an “orderly price rout.” After vacillating wildly in the 10 minutes after the storage report was released (featuring a 11 Bcf injection), the market paused in the low $4.30s and then proceeded to fall 23.3 cents on the day to $4.156, December’s lowest close in three weeks.

If Houston-based Enron Corp., the acknowledged largest energy trader in the world, had a wish list of things it might want to add to its bartering bag, it might be to trade in this entire year. So far, the news seems to have gone from bad to worse, with business deals gone sour, the CEO abruptly departing last summer, the first quarterly loss in more than four years, rumors of shady business deals, and as of Friday, a plunging stock price that seems to find no floor.

Enron Corp., the world’s leading energy trader, reported a large third quarter loss Tuesday, recording non-recurring charges of $1.01 billion against the cost of several failed investments, including segments of its retail energy sales, broadband and water ventures. Before charges, however, profits for the company were up 35%, and Chairman Kenneth Lay attempted to assuage investor worries by assuring analysts that the third quarter charges were part of a plan “to clear away issues that have clouded the performance and earnings potential of our core energy businesses.”

No longer believers in the Enron Corp. energy trading mantra that “bigger is better,” Mirant Corp. and Reliant Resources Inc. executives said Thursday that the focus now is on cash — finding it, paying off debts with it and keeping as much of it as they can. They both conceded that for them, anyway, physical gas trading has not become a cash cow.

No longer believers in the Enron Corp. energy trading mantra that “bigger is better,” Mirant Corp. and Reliant Resources Inc. executives said Thursday that the focus now is on cash — finding it, paying off debts with it and keeping as much of it as they can. They both conceded that for them, anyway, physical gas trading has not become a cash cow.

Surprising more than one trader, the cash market didn’t follow its usual recent pattern of following Tuesday’s screen dive on the following day. Instead, cash was flat to up 50 cents in most cases Wednesday. Most gains were in single digits.

According to a seasoned gas trader and analyst, natural gas prices will have some difficult times in the upcoming late summer and fall period. With expected low shoulder month demand, accompanied by abundant supplies, something has to give.

After failing to locate a purchaser for Canadian-based energy trader Engage Energy, Duke Energy confirmed last week that it has decided to close down the division and consolidate some of its operations. The Canadian natural gas and power marketing operation was a division of Westcoast Energy, which Duke purchased in March (see NGI, March 11).