Monday’s natural gas futures trading session had a little something for everyone. The market erupted higher at the opening bell in reaction to the news that cracks had been found in AEP’s Cook Nuclear Plant # 2. However that buying failed to propel the market past its $6.44 May 14 high, leaving the technical door open for profit-taking. Bears did not waste the opportunity and, with a little help from mild weather forecasts and a falling crude oil market, had no problem pushing the market lower throughout much of the trading session.

The June contract ended at $6.015, down 10.7 cents for the session and near the bottom end of the 44-cent trading range Monday.

Traders were quick to point to knee-jerk buying following on the news of another problem with a nuclear unit as reason for the sharp move higher Monday morning. AEP on Monday said that it will repair several minor defects on the Cook Nuclear Plant Unit 2 reactor vessel head, but this should not affect the refueling outage duration at the facility, which is located in Michigan.

The five small, shallow cracks originally were identified during inspections in 2002, and they have not shown signs of increasing in size, the utility said. However, new industry rules dictate that they be repaired before the unit is returned to service. The refueling outage began May 5 and is currently scheduled for 35 days.

Concerns over nuclear plants have been high since FirstEnergy Nuclear Operating Co. (FENOC) last year was forced to shut down the 935 MW Davis-Besse facility in Ohio after the discovery of major corrosion on the plant’s reactor head caused by boric acid (see Power Market Today, March 14, 2002). Just two weeks ago, the futures market advanced 40 cents following reports of vessel head problems at nuclear units in South Carolina and Florida (see Power Market Today, May 6).

Crude oil futures also played a hand in the volatility of natural gas futures Monday. After spiking to test new seven-week highs at $29.48/bbl, the June crude contract shuffled lower Monday to $28.83, down 31 cents for the session.

Weather was also a price depressant for natural gas Monday. According to the latest six- to 10-day forecast released Monday by the National Weather Service, below normal temperatures are forecast for the southeastern United States from New York to East Texas.

In daily technicals, the bias is still down, chartists agree. The first level of support is at the psychologically important $6.00 mark, with a break likely leading to a quick test of the Fibonacci 61.8% retracement at $5.95. Lower still, the 38.2% Fibonacci retracement at $5.64 would likely stem any major sell-off.

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