Amid diminishing concerns about Tropical Storm Bonnie and Hurricane Charley, the natural gas futures market shuffled lower Wednesday, quickly rescinding nearly all of the gains notched over the previous two trading sessions. The September contract was the biggest loser, dropping 17.7 cents to close at $5.614. By comparison, the out-months fared much better, enabling the five-month winter strip (November-March) to sustain only a modest, 6-cent decline to $6.684.

Adding to the slippage that began Tuesday afternoon, sellers pounded the market lower in the overnight Access trading session. By the time the regular, open outcry market set the tone with a $5.70 trade Wednesday morning, the market’s direction was clear. Within the hour, the market would tumble to $5.565, a half-cent below Monday’s regular trading session bottom.

According to the latest forecast track issued Wednesday evening by the National Hurricane Center, Charley is expected to strike western Cuba Thursday, effectively veering off the more westerly track necessary to strike the heart of natural gas production in the central and western Gulf of Mexico. Not only does the storm’s predicted curvature to the East likely spare the market from any further gas supply disruptions, it also ensures more rainy and mild weather for the eastern United States — an area of the country that hasn’t contributed very much to cooling demand during the month of August.

Moreover, the storm’s new direction gave the market the opportunity to focus its attention on other fundamental price clues, said Tim Evans of IFR Pegasus in New York. “Without the prospect of significant shut-ins from the producing areas west of the storm track, the market is turning its attention back to its bearish storage trend and the cool temperature prospects.”

In announcement Wednesday, Nymex said it plans to begin offering trading in monthly natural gas index and daily natural gas swing swap futures contracts for six delivery locations on its ClearPort electronic platform beginning with the Aug. 23 trading session, which starts at 7 p.m. on Aug. 22.

“The new monthly index and daily swing swap natural gas futures contracts will allow market participants to fine-tune the management of their market risk while continuing to maximize the financial protection offered by the Exchange clearinghouse,” said Nymex President James E. Newsome.

The contracts will be listed for the Chicago Citygate, Henry Hub, Houston Ship Channel, Panhandle Eastern, El Paso-Permian Basin and Waha locations. The index contracts are monthly instruments with a final settlement based on the monthly average of differentials between daily and monthly price references for each location published in Platts Gas Daily and Natural Gas Intelligence or Platts Inside FERC Gas Market Report. The swing swap contracts are daily instruments with a final settlement based on the daily price reference published in Gas Daily.

The index swap futures contracts will be listed for 36 consecutive months beginning with the September 2004 contract. The swing swap futures contracts will initially be listed for the period Sept. 1 through Sept. 30. Beginning on Sept. 1, the listing will be expanded to include not only the remaining days of the current month, but also the following month on an on-going basis. The contracts will be available for trading on ClearPort or to submit solely for clearing. The fees for the monthly index and daily swing swap contracts will be the same as those for the natural gas basis swap futures contracts, Nymex said.

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