Choppy trading continued in the natural gas pit yesterday astraders deposited prices lower, after failing to break throughoverhead resistance on the open. However, after watching pricesrumble mostly sideways for the better part of the afternoon, bullswere once again on the offensive Tuesday evening in reaction toreports that a storm was forming in the western Caribbean Sea.
After slipping 0.3 cents to close the regular session at $5.008,the prompt October contract was up 8.1 cents to $5.089 early inlast night’s Access trading session. Meanwhile, crude oil futures,which have been a rally point lately for gas bulls, were off almosta dollar to $34.15 during the same period yesterday.
“We would be a lot lower if it weren’t for the storm in theCaribbean,” said Ed Kennedy of Miami-based Pioneer Futures. “Crudeis off and the weather is mild, but the traders are caught like adeer in the headlights while there is a potential for this storm todevelop.”
As of Tuesday evening, the National Hurricane Center wastracking a broad area of low pressure located in the westernCaribbean Sea. Upper level winds have become favorable for furtherdevelopment, prompting the Air Force to send a reconnaissanceaircraft to investigate the system late yesterday.
While it was still too early to tell whether this system willhave an impact on gas assets in the Gulf of Mexico, it was apparentthat traders were not taking any chances last night. Thedevelopment of tropical systems in the Gulf and the Caribbean havealready produced stunning knee-jerk reactions in futures pricesthis hurricane season, most notably on Monday, Aug. 21 when themarket jumped more than 31 cents on the news Debby had reachedtropical storm status in the eastern Caribbean.
However, fresh storm news will not be the only thing tradersneed to be on the look-out for Wednesday. Also anticipated is therelease of fresh storage data from the American Gas Association.Market expectations are centered on a 50-60 Bcf injection, which,if realized, will fall dramatically short of both last year’s 81Bcf refill and the five-year average build of 79 Bcf. Over the pastfour weeks the market has only injected an average of 50 Bcf, 18Bcf less than the average injection for this time over the lastfive years.
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