Following the lead of a crude futures market that was spooked by a string of events, September natural gas on Friday took back some of Thursday's losses and jumped above $9 once again, but still managed to stay within the previous day's trading range.
Still reeling from summer Friday syndrome, trading volumes were low as many traders either left early or took the day off completely. After beginning the session higher following overnight trading, September natural gas stayed within a slim 20 cent range on Friday from $9.00-9.20, before settling at $9.111, up 18.3 cents on the day, but 47.7 cents lower than the previous Friday's close.
The week proved to be another wild one for natural gas futures. The September contract traded within a $1.03 range during that time, seeing wide daily gains and losses.
"Looking at my daily natural gas charts, Friday was nothing more than an inside day...technically meaningless," said a Washington, DC-based broker. "First off, trading volumes in all of the Nymex rings was pretty darn light. I called the floor and people could actually sit around and chat, something that couldn't have happened on Wednesday or Thursday. It really appeared as if a lot of the local traders started their weekends early. You have to remember, high volume trading days deserve more significance than low volume trading days."
With a number of international events affecting it, Crude futures showed the biggest jump on Friday. September crude closed $2.08 higher at $65.35/bbl. September unleaded gas and September heating oil increased by 4.1 cents and 3.23 cents to settle at $1.9039/gallon and $1.8228/gallon, respectively.
The broker said a number of events on Friday "freaked out" the crude oil futures market, and the other energies followed. She cited the failed rocket attacks on U.S. Ships in Jordan and interrupted production in Nigeria and Ecuador as making crude a little skittish. In addition, she said traders wanted to be safe due to the fact that it was a Friday and no one would be able to do anything to their position for the next two days.
However, some market-watchers said the production halts and rocket incident weren't the only story. "The larger issue here remains the ability of speculative flows into and out of the markets (but mostly into) to drive prices regardless of the fundamental news," said Tim Evans of IFR energy Services. "The gains [Friday] may cast doubt on the idea that a lasting top has been established and we may indeed see new highs. But the massive swings in price this week have demonstrated the risks involved in playing the game and we think some traders will want to get off this particular roller coaster."
While some were heralding the drop in price this week, Kyle Cooper of Citigroup, noted that prices "are far, far above any level previously seen in August and that does argue that prices could continue to slide. Mother Nature has been incredibly bullish, but if that is tempered, prices may continue lower. This remains a market even more sensitive to weather than in years past," he warned.
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