Trend

Coming into expiration Monday, January natural gas futures continued the trend of gains from Christmas week by punching above the psychological $6 resistance line to go off the board at $6.136, up 31 cents from Friday’s close. Taking over as the new front-month contract, February futures also breached $6 on Monday to close at $6.084, up 27.2 cents from Friday’s session.

The debate over whether Tuesday’s $5.458 low for the move was in fact the bottom of the bearish trend continued to rage Wednesday as January natural gas futures pushed to a session high of $5.792 in morning trade but failed to hold on to a majority of the gains as a wave of selling arrived in the afternoon. The prompt-month contract ended up closing the day’s regular session at $5.686, up 10.7 cents from Tuesday’s close.

Unconventional gas resources have been expanding, with gas shale growing the fastest, up to 128 Tcf in 2006 from 52 Tcf a decade earlier, and that trend is likely to continue, an energy consultant said Wednesday.

Siding with prior-day futures weakness instead of sticking to the week’s flip-flopping trend, cash points unanimously crumbled on Friday with most points declining by more than a half-dollar and a number of points out west shedding more than a dollar.

Keeping with the flip-flop trend of the week, a large majority of natural gas cash points on Wednesday reversed course from Tuesday and recorded gains of up to a half dollar. While the East, West Coast and onshore Gulf of Mexico area posted gains across the board, the Midcontinent saw a few declines mixed in with widespread gains. The Rockies had basically equal gains and losses.

Unconventional gas resources have been expanding, with gas shale growing the fastest, up to 128 Tcf in 2006 from 52 Tcf a decade earlier, and that trend is likely to continue, an energy consultant said Wednesday.

As a couple of producers had expected (see Daily GPI, May 9), softness dominated the cash market Friday. A cooling trend in the Northeast proved to be short-lived, and while weather-based demand was growing a bit here and there, the overall temperature picture remained fairly moderate. A 6.4-cent futures loss the day before and the drop of industrial load during a weekend contributed to the general bearishness.

As expected, a serious warming trend due to start Friday following widespread frigid weather at midweek induced softer prices at most points Thursday. Northeast citygates, which had seen huge spikes on Wednesday, recorded equally spectacular plunges Thursday.

Signaling the continued downward trend of wholesale natural gas prices, Intermountain Gas Co. puts its second consecutive purchased gas adjustment (PGA) rate decrease in effect Monday, while Spokane, WA-based Avista Utilities last Friday asked the Idaho Public Utilities Commission (PUC) to lower its rates following a similar drop in the PGA.