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Energy Bulls Take a Look Back to the Future(s)
Fueled by gains in nearby crude oil pit, it was up, up and awayonce again for natural gas futures as traders added to their betsthat the market will experience supply woes this winter. As itturns out, that was more than enough buying to propel natural gasfutures to double gains and the second highest prompt monthsettlement price in the commodity’s 10-year history.
After carving out a $5.095 high, the October contract closed at$5.011, up 13.1 cents or 2.7% on the day. By comparison, Octobercrude set a new 10-year record by finishing at $35.14, up $1.51 or4.5% Monday.
For longtime Nymex local trader Ira Hochman, yesterday’s pricestrength was somewhat of a surprise considering the double-digitlosses last Friday. “We had a good rebound in natural. Market wasmoving up so fast I thought there was a storm out there. Then Ilooked at crude and I got long in a hurry. As soon as [crude] tookoff, you have to be a buyer in natural. There was just too muchemotion out there.”
However, yesterday’s session in the energy complex wasbittersweet for Hochman who remembers buying crude oil at $9.75back in 1986. “Sure I bought crude at its all-time low. I also soldit about an hour later at $9.80. There was a huge wall of sellersabove $9.80 and nobody thought it was going higher. Not too longafter that, crude was trading at $13, he lamented. Also conspicuousfrom a historical perspective is yesterday’s $35.85, which matchesthe November 1990 high to a tick, added Hochman.
Back on the natural gas front, Cynthia Kase, of New Mexico-basedKase and Company, maintains that the upside potential remains good,despite the possibility of a correction. Based on herinterpretation of Elliot Wave theory, October has projectedresistance at $5.20 and then again in the mid-$5.00 area on a breakhigher. Above the $5.47 level, Kase sees an upside projection at$6.12. However, all of those projections are contingent on themarket holding $4.78 on the low. A break of support there couldleave the market susceptible to a drop to $4.64 at the least, withan 80% probability of an extension down to $4.48.
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