Natural Gas Prices Soar The Associated Press, Fri 1 Sep 2000

Natural gas futures soared to their highest-ever closing price Friday on the New York Mercantile Exchange as scorching weather in parts of the United States further heated concerns about tight supplies.

Crude oil prices also continued their seemingly relentless climb higher.

In other commodity markets, sugar rose and grains and soybeans fell.

Continued hot weather ahead of the Labor Day weekend and the prospects for more strengthened notions that heavy air conditioning use will further drain natural gas supplies at a time the market can ill afford it.

Natural gas powers many plants that produce electricity, and stockpiles are low at a time when they should be building in advance of the heating season.

Natural gas for October delivery rose 5.3 cents to $4.835 per 1,000 cubic feet on the New York Mercantile Exchange.

Market-watchers worry that strong demand due to the hot weather will be shown to have made another dent in supplies when weekly industry data is issued after the holiday.

``We need to have inventory build above normal in order to get inventories closer to normal levels by the winter,'' said Michael Lynch, an analyst with WEFA, an economic think tank in Bedford, Mass.

``People have been watching the heavy amount of drilling for months now and we haven't seen a change in supplies yet, and I think that's making them nervous,'' he said.

Prices also were buoyed Friday by the possibility of a storm damaging production facilities if it strengthens and heads toward the Gulf of Mexico. A strong tropical disturbance in the eastern Atlantic Ocean was being eyed closely.

Oil prices advanced as the market waits for word on whether OPEC will hike output at its Sept. 10 meeting. October crude rose 26 cents to $33.38 a barrel.

Also, October heating oil fell 1.06 cent to 97.64 cents a gallon and October unleaded gasoline rose 1.29 cent to 95.85 cents a gallon.

In London, October Brent crude from the North Sea rose 13 cents to $31.85 a barrel on the International Petroleum Exchange.

Sugar prices jumped sharply on the New York Coffee, Sugar and Cocoa Exchange thanks to a late flurry of short-covering  the buying of contracts to offset previous sales. Volume was thin, exacerbating the price swing.

October sugar rose .26 cent to 10.82 cents a pound.

Grain and soybean prices retreated on the Chicago Board of Trade in profit-taking ahead of the three-day Labor Day weekend.

Corn had the biggest decline, falling more than a percentage point in quiet trading. Market-watchers said pressure on prices is likely to increase in the days ahead with the harvest already under way in the southern Midwest and central Plains.

Copyright 2000 Associated Press.

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-- Martin Thompson (mthom1927@aol.com), September 01, 2000

Answers

For all you worriers out there, get ready to eat your nails down to the elbow. This is really serious stuff. Natural gas is the hub off which all other fuels flow. It is the cleanest burning, environment friendly of all fuels, and is in the greatest demand for that reason. If it goes, everything goes. There will be lots and lots of misery to pass around.

-- Wellesley (wellesley@freeport.net), September 01, 2000.

Is their any question about natural gas going down? From all I've read lately, I don't think so.

-- Loner (loner@bigfoot.com), September 01, 2000.

My big queston is: will the natural gas price / shortage explosion occur in time to sink Al Gore?

I don't think so, but hope against hope that it will.

-- JackW (jpayne@webtv.net), September 01, 2000.

I think one of the big things that has been generally overlooked here is all those so-called interruptible contracts out there. I don't think many of the oil analysts have considered that when many natural gas suppliers invoke this provision of these contracts the huge extra burden of supplying yet more oil has been take into account. I expect a very major fuel oil crisis in the Northeast this winter as a result.

-- Chance (fruitloops@Hotmail.com), September 01, 2000.

I have friends in Mass. Does this mean they will still have to fall back on their y2k propane stockpiles to keep from freezing to death?

-- Nancy7 (nancy7@Hotmail.com), September 01, 2000.

The government has a big oil stockpile. But, I'm sure no such comparable natural gas stockpile exists.

Meaning?

-- QMan (qman@c-zone.net), September 01, 2000.

Nancy,

Based on all of the posts here and elsewhere [miorroring these], I'd say get them tanks filled and do it now. Cause' it's gonna be to late when everyone else tries to.

In reference to the interruptable contracts issue, it was posted that some states and / or vendors will require those customers to have their backup stocks in place or contracted to be in place as needed.

-- (perry@ofuzzy1.com), September 01, 2000.