“Close, but no cigar,” was one trader’s apt description of theprice action yesterday in the natural gas pit at the New YorkMercantile Exchange. A session that saw the prompt month unable tobreak stubborn resistance near $2.40. After an early dip, the Julycontract spent much of the session near its $2.39 high beforeplummeting lower at the close. July finished at $2.343, down 1.5cents.

Several traders were surprised by the higher Nymex prices thatcame in the face of “sluggish” cash market prices. “This isridiculous,” commented a exasperated Chicago marketer, who couldnot understand why his Chicago area sales were fetching a nickelless than the July futures screen. NGI’s Chicago Citygate price fortoday is $2.34. He feels the price disparity will only get worsebefore it gets better. “[Today] will we get another bullish storagereport. Last year the market injected 106 Bcf. We will be lucky tobreak 80,” he reasoned.

Another Midwest trader was quick to point to increased pipelinecapacity, which she feels has helped to soften Chicago prices.Northern Border is the only pipeline bringing in Canadian supplythat is full right now. I think we may have underestimated theeffect of that excess supply.”

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