They may have to start handing out seat belts at Nymex justprior to the release of American Gas Association’s weekly gasstorage report each Wednesday. In a span of only a few minutesfollowing the 2 p.m. report of a 65 Bcf injection last week intostorage, September futures spiked to $4.565, its highest levelsince June 28, but then immediately plummeted back into the low$4.40s.

After several more large yo-yo moves, the contract fell to itsdaily low of $4.390 and traded sideways the rest of the afternoon.Although it was quite a spectacle, September futures ended the dayup only a penny at $4.419.

It was a lot of action for a storage injection that was onlyslightly on the high end of market expectations. The 65 Bcf fillwas 20 Bcf more than during the same week last year but 3 Bcf lessthan the six-year average of injections for the week. Working gaslevels currently are 366 Bcf less than at the same time last yearand 171 Bcf less than the five-year average. “Guessing whichdirection the market will go even if you know the storage number isa crap shoot,” said one analyst. “Might as well flip a coin,” saidanother observer. He noted that many people take their limit ordersoff the table in preparation for a major reaction following therelease of the report, and that tends to leave a vacuum whichallows even greater volatility.

“September got back up to a big area,” said Ira Hochman of TrotTrading Corp. “Obviously anywhere in the $4.51-56 area is going tobe significant because you have the island top there on June 27. Itlooks like we had a good push up. But it looks a little neutralizedto me. Every night they sell off and every morning they come inhigher. Every morning I’ve been expecting this thing to [come off]but it has been coming in higher with all these weather reports.Without the weather reports I think it would come off.”

The National Weather Service’s new six to 10-day outlook callsfor above normal to much above normal temperatures to cook theMidwest, upper Midcontinent, Northeast and Mid-Atlantic. And theNational Hurricane Center upgraded the storm 120 miles northeast ofthe Bahamas to Tropical Depression Four, but said it expected thedepression to move away from the Florida coast and farther out tosea. Meanwhile, Hurricane Alberto at 5 p.m. was located 965 milessoutheast of Bermuda and moving toward the northwest at 22 mph.With winds at 75 mph, Alberto remained a minimal hurricane butconditions were favorable for strengthening, the NHC said. It stillposed little threat to the Gulf of Mexico producing areas.

Without an immediate storm threat to production, observers areskeptical about futures continuing gains for an eighth consecutiveday. “In the long term, I still think this thing is going to $6,$7, or even $8,” said Hochman, “but right now we’re due for acorrection, I’d say somewhere in the mid-teens to $4.20 area. It’sbeen seven days in a row straight up. I can’t believe that. It’sbecause of the weather. After today’s action, I think this willcome off. I wouldn’t be long overnight tonight. I would be short alittle bit and wait until it opens. If it opens higher, I’d hit itand trade against today’s highs. I definitely think that is a goodplay.”

Another futures analyst said he expects a retracement to thehigh $4.20s. “It will probably stop about $4.30 or $4.28 and stallout and then try to push up again. It’s going to be a choppy movedown. Based on the charts, it shouldn’t collapse. It should be aslow move down.”

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