Adding to losses that began in the Sunday evening/Monday morning Access trading session, natural gas futures accelerated lower Monday as traders continued to price in the impact of seemingly plentiful supply in a market that is lacking a strong demand component. At the closing bell, the prompt June contract was 25.1 cents lower at $4.239. The July contract followed suit, also tumbling 25.1 cents to close at $4.314.

A total lack of buying was at the root of Monday’s price erosion, according to Tom Saal of Miami-based Pioneer Futures. “The buyers just backed away [Monday], sat back, relaxed, and watched the market come to them. There was not a lot of support out there. We are trading through the area that the market spent precious little time last year on the move up…. If I had to pick it, I would say June has support at $3.86, which corresponds with its Halloween day low from last year,” he said.

Fundamentally, the market does not look much better, Saal continued. “There currently exists a large summer to winter spread, which is providing most storage operators with the opportunity to recover the full cost of carrying the gas into the winter. That gives people the incentive to inject as much gas into the ground as possible right now and we belive that the market is going to get another hefty storage number Wednesday,” he said.

Citing 29.7% fewer degree days heating last week than during the same period last year, Thomas Driscoll of Salomon Smith Barney looks for the AGA to announce another sizeable storage refill this week. Specifically, he targets an injection of 95-100 Bcf to easily surpass the 58 Bcf refill seen at this same time last year. Looking ahead, Driscoll believes that the high rate of injections will continue to dwindle the year-on-year storage deficit. “The storage deficit has fallen from 404 Bcf four weeks ago to 209 Bcf currently. Two weeks from now we expect the deficit to be about 118 Bcf.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.