Tuesday

Natural gas is second only to the newly established electricitymarket in terms of volatility, and Tuesday it did little to dispelthat notion as the market dipped momentarily, only to spikedramatically higher in the last 90 minutes of trading, leaving eventhe most weathered of bulls surprised by the advance. Octobersettled at $2.132, a 17.8-cent gain for the day and nearly ahalf-dollar above the $1.63 low established less than two weeksago. Estimated volume confirmed the active trading with over120,000 contracts changing hands.

The futures market began the week Tuesday in the same fashion itclosed out last week – probing higher amid a technical bouncesupported by continued apprehension about tropical storm activity.That enabled the October contract to post a gain for its third dayin a row by advancing 9.1 cents to $1.874.

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.

Bill Richardson was sworn in as the new energy secretary onTuesday, one day after Senate Energy Committee Chairman FrankMurkowski (R-AK) cleared him of allegations that he may have misledCongress when testifying during his confirmation hearing last monthabout a job offer he made to former White House intern Monica S.Lewinsky.

Lacking much else in motivational factors beyond Tuesday’sfutures dive, cash prices softened Wednesday as expected.Across-the-board decreases ranged from barely a penny to as much asa dime. A Midcontinent marketer was surprised the drops weren’t anygreater than 2-5 cents in her region.

Virginia Power asked the State Corporation Commission Tuesdayfor authority to build and operate five natural gas-firedcombustion turbines to generate power for the utility’s two millioncustomers during peak demand periods.

Key Energy Group Inc. announced Tuesday that it has signed adefinitive merger agreement to acquire Dawson Production Servicesfor an estimated $352 million. The terms of the agreement call forKey Energy to purchase 11.5 million outstanding shares of Dawsoncommon stock for a total of $202 million, and to assume Dawson’sexisting debt of $150 million.

All indications pointed to the futures market continuing higheron Wednesday: gains posted in the Tuesday evening Access session, awell bid over the counter market Wednesday morning, and inertiacoming off two days of advances. But when the market openedyesterday a vital component was missing, prompting a beleagueredbull to say “the buyers just didn’t show up [Wednesday] morning.”The September contract meandered down from its open, slipping 2.2cents to close at $2.873.

The futures market made gains for the second day in a rowTuesday on what many sources are calling a bit of a technicalcorrection in an otherwise down market. That left the Septembercontract hovering within striking distance of the downtrend linethat has thwarted upward momentum since July 9. September finishedup 2.6 cents to settle at 1.895.