Active Trading by Locals Sends Futures Lower
Adding to the price erosion that began last Tuesday, natural gas
futures tumbled lower at the New York Mercantile Exchange Monday as
unsupportive cash market values met with heavy local selling.
However, when a second wave of selling failed to materialize,
speculative traders were forced to cover shorts into the close
yesterday, sources said. The August contract finished at $2.144,
down 1.9 cents on the day.
A Houston marketer insisted the most dominant sign of weakness
was cash prices, which traded down from weekend levels. Gas for
delivery at the Henry Hub was among the biggest losers, slipping 4
cents to $2.11. And the outlook doesn't get much better. "Cool
weather all up and down the East Coast this week is going to put a
crimp in gas demand for electric generation. In fact, the only
panic you will see is from utilities that will be struggling to
meet their minimum daily [gas] requirements," he said.
Bulls, on the other hand, are not ready to throw in the towel
quite yet and look for this week's storage report to bail them out
of a increasingly dismal price scenario. Early market banter is
centered on a net injection of 61-75 Bcf, which would turn the
oft-quoted year-on-year surplus into a deficit. Last year the
market put 93 Bcf into the ground, making 76 the magic number this
year's refill will be measured against. Anything less will turn the
year-on-year surplus to a deficit for the first time since January
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