Steady Selling Deals Futures Second-Straight Losing Session

Pressured lower by weaker crude oil futures along with a sagging physical market, natural gas at the New York Mercantile Exchange was softer Thursday with buyers on the sidelines, unwilling to add to their already hefty longs. After chopping lower for most of the session the October contract received a late boost on renewed hurricane fears. However those late gains were more than offset by early losses and that left the prompt month in negative territory, off 3.1 cents at $5.287 at the close yesterday.

While few if any supply disruptions are expected from its 65-75 MPH winds, tropical storm Helene burst onto the scene yesterday and prompted traders to cover shorts late in the session. Traders were in agreement that without the storm's influence, October would have retraced back into the $5.10s.

For Tom Saal of Miami-based Pioneer Futures, yesterday's sell off was expected considering the extremely overbought conditions that existed Wednesday. "Twice we failed get through the $5.38 level. It was only natural for the market to test the downside. Now we have a game of chicken. The longs have watched their profits erode for two days now. It will be interesting to see if they can stomach another down-day."

While Saal admits that the move lower has alleviated the overbought conditions, he cautions that the selling could increase exponentially on a break back into the teens. "There are definitely some sell stops waiting below $5.20," he said. They tried to push it there today, but Helene spoiled their plans."

Although more symbolic in nature than an actual market mover, the first snow of the season was fell overnight in the Northern Rockies to usher in the first full day of Autumn. Looking ahead, below normal temperatures are expected through the end of the month across a large swath of the country extending from the Pacific Northwest across the Northern Plains to include the Great Lakes region.

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