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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: SargeK who wrote (50560)	9/7/1999 9:42:00 PM
From: oilbabe	Read Replies (1) \| Respond to of 95453

New York, Sept. 7 (Bloomberg) -- Natural gas rose more than 4 percent, gaining for a second session, amid expectations that supplies could be tight during the peak-demand winter heating season. Lower-than-normal gas exploration levels earlier this year could lead to shortages, analysts said. Prices fell 12 percent last week, retreating from a 21-month high on Aug. 23, and given the possibility of tight supplies, traders said the price drop made futures attractively priced. ``Just like it got too overextended to the up-side, it got too overextended to the down-side,' said George Ellis, a trader at Paribas Energy Futures in New York. Natural gas for October delivery at the Henry Hub in Louisiana rose 11.6 cents, or 4.5 percent, to $2.677 per million British thermal units on the New York Mercantile Exchange. Gas futures have risen 8.3 percent in the last two sessions, leaving them 43 percent higher than a year ago. Last week, prices tumbled after hurricanes and other severe storms stayed away from production areas in the Gulf of Mexico, and U.S. inventories rose more than expected. Prices soared earlier because of the threat posed by Hurricane Bret and other storms. Prices could rise again tomorrow, said John Murphy, a gas trader at Aquila Energy Corp. in Kansas City, Missouri. Hedge funds and other speculators whose selling contributed to last week's drop, could be prompted by the two-day rally to resume buying, Murphy said, predicting prices could rise as high as the $2.80s per million Btu tomorrow. Exploration Slowdown A plunge in prices to a 3 1/2-year low in February led many U.S. exploration and production companies to cut budgets for capital spending, traders said. The number of U.S. drilling rigs actively exploring for or developing new supplies fell to the lowest level in almost four years this spring, according to Baker Hughes Inc., a Houston-based oil and gas field services company. Since early May, the rig count has rebounded faster than natural gas prices, but there typically is a lag of months or even years from the time exploration for new reserves begins until new production reaches the market. Many experts are predicting supplies could be tight this winter as older wells are depleted before new ones begin producing. U.S. inventories of natural gas rose 69 billion cubic feet to 2.521 trillion cubic feet during the week ended Aug. 27, the American Gas Association reported last week, a third more than analysts expected. That left stockpiles 5.7 percent below the year-earlier level but about 5 percent above the five-year average for that time of year. Storm Fades The latest storm of the Atlantic hurricane season, a tropical depression, was dissipating in the Gulf about 120 miles southwest of Brownsville, Texas. ``Nothing's really developing, but this time of the year any time there's mention of storms it adds a little support' to gas prices said Sam Weaver, manager of natural gas trading at GSC Energy Corp. in Atlanta. Meteorologists are predicting an unusually active Atlantic hurricane season this year. The season runs through November, peaking in August and September. Gas futures also got a boost from a government report forecasting that the price of heating oil will rise faster than that of natural gas, with which it competes. The U.S. Energy Department's Energy Information Agency said heating oil prices will rise about 24 percent a year in 1999 and 2000, compared with a 9 percent annual increase for natural gas. The prediction was contained in the EIA's monthly Short-Term Energy Outlook released this afternoon.