The futures market was poised to trade higher yesterday onmomentum gained from a string of advances dating back to lastThursday, but revised forecasts calling for seasonable temperaturesand a lack of technical direction took the wind out of bull-tradersails, allowing the market to slip lower. For the second day in arow, changes were more pronounced in the December contract than theprompt month. November slid 2.2 cents lower to settle at $2.18, butDecember lost 2.8 cents to $2.455.
Source were surprised by the market’s inability to move higherWednesday after December settled above its 40-day moving average onTuesday. One source said the market moves over the past two daysare a case of a “failed bull trap. “Fund groups use the 40-day astheir trading bible, and the locals know this and will try toentice the funds into the market. But, for whatever reason, thefunds didn’t take the bait Wednesday, and the locals were notinterested in doing all the work themselves.” Fund Managers may beglad they held off after seeing the latest AGA storage report.Featuring a larger-than-expected 58 Bcf injection, the Wednesdayevening report was met with additional selling in last night’sAccess session. Working gas levels are now more than 3 Tcf for thefirst time since 1994. As of 7 PM EST the November contract hadslipped an additional 4 cents to $2.14.
Looking ahead to the November expiration next Wednesday, somebelieve the fate of the futures market may have shifted into thehands of the cash market. A Gulf Coast marketer predicts moderatingtemperatures and lower storage availability will force utilities toturn back gas early next week. “That could really work out in theirfavor. Extra gas in the market means cash prices will be pressureddown. November futures would probably follow which would produce alower last-three-day settlement, effectively cutting the priceutilities would pay for their November purchases.”
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