Storage-Wednesday Has Something for Both Bulls and Bears
Speculation around the much anticipated storage report continued
to run rampant yesterday on trading floors across the natural gas
industry and that coupled with steady fund buying was enough to
lift the futures market higher for the third day in a row. The
September contract raced off to a fast start, but was unable to
retest the $2.72 high set last Thursday. After notching a $2.66
high trade around 10:30 EST the prompt month was left to chop
sideways before eventually settling up 4.4 cents at $2.642.
But all the hype surrounding the weekly supply data seemed well
deserved when the American Gas Association said that only 26 Bcf
was injected into underground storage facilities last week. That
figure fell short, not only of last year's 79 Bcf refill, but also
compared to the range of market expectations centered on a 30-50
Bcf refill. Total working gas in storage now stands at 2,306, 87
Bcf less than a year ago (see chart). However, at least one trader
was quick to dismiss the scant injection. "[Storage] does not come
as a surprise to me. I had 30 [Bcf] in our office pool," bragged a
Houston based marketer admitting that he won the pool. "There were
some who looked for as 45 [Bcf] but that sort of number defied
logic considering the oppressive heat and strong demand for
electric generation last week." He may have not been alone because
shortly after the storage report was release prices tumbled back
down to the $2.60 level.
However, another trader pointed to the latest six- to 10 day
weather forecast released by the National Weather Service (NWS)
about the same time Wednesday afternoon as a contributing factor to
the price erosion. The NWS said the entire Northeast, most of the
Upper Midwest, and California should expect below-normal
temperatures for the August 10-14 time period. Normal temperatures
are forecast over parts of the central plains, Southeast and east
of California, with the remaining third of the country, including
most of Texas, slated for above normal readings.
Looking ahead, a Gulf trader feels that last week's high of
$2.72 is the number that needs to be retested in order for the
bulls to really get the market rolling.
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.