Late Sell-Off Spoils Bulls' Day
"Close, but no cigar," was one trader's apt description of the
price action yesterday in the natural gas pit at the New York
Mercantile Exchange. A session that saw the prompt month unable to
break stubborn resistance near $2.40. After an early dip, the July
contract spent much of the session near its $2.39 high before
plummeting lower at the close. July finished at $2.343, down 1.5
Several traders were surprised by the higher Nymex prices that
came in the face of "sluggish" cash market prices. "This is
ridiculous," commented a exasperated Chicago marketer, who could
not understand why his Chicago area sales were fetching a nickel
less than the July futures screen. NGI's Chicago Citygate price for
today is $2.34. He feels the price disparity will only get worse
before it gets better. "[Today] will we get another bullish storage
report. Last year the market injected 106 Bcf. We will be lucky to
break 80," he reasoned.
Another Midwest trader was quick to point to increased pipeline
capacity, which she feels has helped to soften Chicago prices.
Northern Border is the only pipeline bringing in Canadian supply
that is full right now. I think we may have underestimated the
effect of that excess supply."
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