For the first half of December, natural gas futures have been awhirlwind of volatility, where chart gaps and double-digit pricemoves have been almost the norm. So it came as a welcome change forsome when the prompt January contract exhibited a more sedatedemeanor Tuesday, trading within a narrow band and settlingunchanged for the day. Estimated volume was a relatively quiet50,593.
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In yet another instance where bigger is believed to be better inthe deregulated energy marketplace, Boston Edison parent BEC Energyand Cambridge, MA-based gas and power holding company CommonwealthEnergy System plan to merge in a cash and stock deal. Thetransaction also represents the acquisition of gas assets byelectric BEC.
Consolidated Natural Gas (CNG) is taking advantage of depressedprices in the E&P sector and spending more of its money where itsees the most long-term bang for the buck. Having pulled out of themarketing business, CNG’s $524.5 million capital budget for 1999continues the company’s focus on expanding its exploration andproduction business. More than 60% of the 1999 budget is allocatedto CNG’s E&P subsidiary, CNG Producing Co.
The hypervolatility in swing deals done Friday for Nov. 1-2 madeit difficult to gauge where the cash market was moving Monday. Butthe overall mix of flat to about a dime or so up or down (includingjust about all points in between) amounted to a general wash thattilted a little bit to the negative side, sources said. Besides,they added, it was generally a quiet day for most traders as theytook stock of bidweek and prospects for the upcoming days.
For the last several weeks the futures market has been a modelof volatility where one day’s gains were the next day’s losses.However, the market couldn’t make up its mind yesterday and afterabruptly spiking higher in the morning, ran into overheadresistance and subsequent selling that forced the market lower inthe afternoon. The October contract settled nearly unchanged forthe day at $2.186.
Southern Company CEO A.W. “Bill” Dahlberg is something more thanshy about predicting where gas prices will go. But the industry’sembrace of gas-fired generation does prompt a modestly optimisticresponse to the question. “It would be logical to say that ifthere’s that much new demand for gas, the likelihood is that itwill drift up. And I guess if I were making the bet, that’sprobably the bet that I would make,” Dahlberg told reporters duringa briefing at the 17th Congress of the World Energy CouncilWednesday in Houston.
A delay on upstream unbundling continued this week in Oklahomawhere regulators and Oklahoma Natural Gas are in a heated battleover some of the changes ordered by the commission in July. Theutility refuses to begin a competitive bidding process ontransmission and supply service to the state’s major cities. Itfiled an appeal of the unbundling order with the Oklahoma SupremeCourt last week, saying it raised a number of constitutionalissues. The two sides may reach a settlement, but a dispute overabout $11 million stands in the way.
The July Nymex contract started the week right where it left offlast Friday by probing 2.1 cents higher to settle at $2.191yesterday. After trading higher into the closing bell last Fridaythe market opened lower on Monday, briefly tested short-termsupport, then managed to retrace back up near overhead resistanceat $2.20-21. Estimated volume was a healthy 56,566 contracts.
Puzzling out what lies where in the Gulf of Mexico will beeasier with the availability of digital coordinate data for all ofthe Gulf’s gas and oil pipelines. The U.S. Department of theInterior’s Minerals Management Service (MMS) has introduced anautomated pipeline mapping system that covers 20,000 miles ofpipelines in federal waters.
The cash market hemmed and hawed again Tuesday morning, leavingprices virtually where they were last Friday. However, the futuresmarket would not go quietly. After a fairly unremarkable session tostart the week, the bulls once again had their way, pushing the Maycontract up more than 13 cents for the day(please see futures story). Cash prices were mostlyimmune to the strength.