Warming

With the onset of warming weather and rolling blackouts, California officials and energy industry stakeholders are trying to find more common ground, but the much-needed legislative and financial solutions failed to materialize last week. The governor, generators and legislators are expected to get together this week to seek a way to salvage proposed solutions, and state regulators will decide how to spread already-approved electricity retail rate increases.

Generally the cash market failed to find any support from eitherAGA’s big storage withdrawal report Wednesday afternoon or thescreen’s strong push upwards Thursday. With the exception ofupticks at a few scattered points, cash numbers ranged from flat todown nearly a dollar at Transco Zone 6 (NYC). Most of the declineswere between about a nickel and 30 cents.

Amid a devastating combination of a forecast calling forwarming temperatures and technical weakness, the natural gasfutures market started the year with a crash Tuesday, as tradersliquidated their long positions en masse. The price impact was feltimmediately as February prices tumbled below $9.00 in overnightAccess trading Monday night.

There are still no takers in a plan to unbundle Colorado’s gas utilities, but at least two utilities may be warming to the idea. A meeting in mid-July of the Colorado Public Utilities Commission (PUC) to discuss natural gas local distribution company unbundling, gas utility plans and consumer issues concluded with only two companies — the largest ones serving the state — reporting that they might provide unbundling programs. Just not now.

There are still no takers in a plan to unbundle Colorado’s gasutilities, but at least two utilities may be warming to the idea. Ameeting last week of the Colorado Public Utilities Commission (PUC)to discuss natural gas local distribution company unbundling, gasutility plans and consumer issues concluded with only two companies— the largest ones serving the state — reporting that theymight provide unbundling programs. Just not now.

Prompted by weaker physical prices and forecasts calling forwarming temperatures this week, traders in the natural gas pit atNymex had little choice but to push futures lower Friday as theycasually transferred long positions from the prompt contract to theback months. Slipping 6.6 cents on the day to finish at $2.785, theApril contract now sits just above trendline support on the dailychart, sources said.

Despite warming temperatures across much of the nation andforecasts calling for more of the same, natural gas futuresrebounded yesterday, as traders covered shorts amid heavilyoversold conditions and ahead of potentially “very bullish” storagedata to be released today.

Despite warming temperatures, both forecasted and actual, thenatural gas market posted its second day of gains Thursday in atechnically driven trading session. After a strong open, theDecember contract received a boost from short covering by tradersbetting that the market may have reached a short-term bottom in thelow $2.40s. The prompt month finished at $2.496, up 4 cents on theday.

Natural gas futures sifted lower Monday following news ofwarming East Coast temperatures and amid a weakening technicalpicture. After a disappointing sub-$3.00 opening, the Novembercontract chopped sideways Monday to settle at $3.016, off 5.6-centsfor the session. Volume was somewhat thin as only 63,328 contractschanged hands.