Rep. Wes Watkins (R-OK) introduced legislation Wednesday thatwould provide marginal well tax relief for oil and natural gasproducers. This is a “rifle shot approach,” and is not seen as acompanion to the measure on the same issue that Sen. Kay BaileyHutchinson (R-TX) is expected to sponsor later this week.
Articles from Wednesday
The cash market once again ignored spreading mild weatherWednesday and posted price gains that were most often around anickel. Although the central and northern Atlantic Coast regionswere still feeling some late-winter chill, most of the rest of thenation ranged from spring-like to somewhat summerish. So the pricestrength again derived from the screen, sources concluded. It onlyemphasises, one said, that “this market never really has been doingwhat the weather indicates it should this winter.”
The April Nymex contract crept 3.5 cents higher to $2.365 onWednesday, as traders continue to hold the spot month to smalldaily changes ahead of the contract’s expiration this Friday. Aprilmanaged to reach $2.40 before intraday profit taking drove thecontract back, a source told GPI. Total estimated volume came in at70,152 contracts.
Kentucky’s two largest electric utilities – Louisville Gas andElectric (LG&E) and Kentucky Utilities (KU) – won final FERCapproval for their merger Wednesday, paving the way for itscompletion sometime in the second quarter, the utilities said.
As sources had predicted, Wednesday’s run-up on the Nymex screenset the stage for cash price rises Thursday, which were abetted byfurther futures gains. There was even some expected cold weatherdemand in the central and eastern sections of the U.S. to help giveprices a little boost, traders said. Increases were on the modestside, mostly within a range of 2-5 cents.
Brokers and speculators (at least some, anyway) may havebreathed a collective sigh of relief on Wednesday, as volatilityreturned to the New York Mercantile Exchange. The April contractfinally broke out of the tight $2.105-205 trading range that hadbeen containing its movements since March 6 by virtue of its 8.4cent rise to $2.239. Sources agreed the activity was led byanticipatory buying ahead of the release of the latest AGA storagereport. “It was more buy based on rumor today, but the rumor wasstrong enough to drive April above major resistance at $2.205,” oneof the sources told NGI.
Rep. William M. “Mac” Thornberry (R-TX) introduced legislationWednesday aimed at “completely overhauling the current system” usedby the federal government to collect royalties on oil and naturalgas production.
El Paso Natural Gas conceded Wednesday it discontinueddiscounting interruptible transportation early this year, but saidits action was primarily due to its new status as “swing supplier”of California-bound transportation – a position that it says givesit free reign to charge maximum IT rates.
Natural gas producers scored a victory Wednesday when FERC ruledthey could post surety bonds in lieu of multi-million dollarrefunds to customers that fast coming due on March 9th. The bondmethod guarantees that customers will receive their refundpayments, and it gives producers what they seek most – a delay inpaying out the amounts until disputes over the refunds calculationsare resolved. The downside of this option is that producers will berequired to continue paying interest on the refund principal aslong as the bond remains in effect. Producers also have thealternative of paying their refund amounts into escrow accounts.