Friday's Action Vastly Over-Rated
Thursday night's Access gains, and higher prices in both the
over-the-counter and cash market set the stage for the May futures
contract to blast off Friday. In fact, the buzz around the pit at
Nymex early Friday centered on when, not if, the prompt month would
fill in the chart gap up to $2.19. But despite all the hoopla and
bullish sentiment, the May contract could manage only a half-penny
gain from its $2.16 open, leaving the market to trend lower
throughout the rest of the day. May finished 1.3 cents lower at
A Houston marketer thinks a lot can be learned by looking at the
price action over the last few days. "The funds have been the
active ingredient in this market. On Wednesday, they were extremely
short, forcing the market to $2.075 and [Friday] they were
extremely long, leading the charge to $2.165. However, in both
cases they received little or no help from either trade buying or
selling and so they were unable to influence a move outside of the
trading range." Having said that, he feels the market may have
found fair value in the $2.10-14 level until it can latch onto
something fundamental for direction.
Natural gas has endured three winters in a row of above normal
temperatures, but Mother Nature may leave its mark on prices yet.
The esteemed Colorado State hurricane forecaster William M. Gray
predicts there will be 14 named storms during the Atlantic
hurricane season, which is dramatically more than average of 9.3
(see full story that follows).
And although most would agree hurricane hype has yet to be
imbedded into the futures market, one trader said he had seen its
impact in the forward market. "There has been a real unwillingness
on the part of sellers to offer term gas for the summer months
because of how bad they were burned last August and September when
gas was shut in. The only term deals out there are carrying a big
premium and nobody is interested in paying up."
And in addition to the possibility of an active hurricane
season, the market is starting to weigh the possibility of warmer
than normal summer. By looking at sea surface temperatures in both
the Pacific and the Atlantic Oceans, Fred Gesser of Omaha-based
Strategic Weather Services expects the next three months to feature
generally above-average temperatures in the Central U.S. and
Plains. However, that will be countered by normal to below-normal
temperatures in the Northeastern U.S., Gesser continued.
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