The futures market concluded what one trader described as a”tumultuous trading week” by slipping for the fifth straight day,leaving futures at their lowest level since March 1997. There was alittle something for everyone in the market last week: speculativeselling, a bullish storage report, and even a little hurricanehype. The only thing missing from trading last week was a dayregistering a gain. That left even the most bullish of tradersscratching their horns wondering when the market will reverse itsdowntrend. The September contract closed at $1.844 on Friday, down6.2 cents. Friday’s With that, the market concluded the month ofJuly. A month that saw major declines in both cash and futuresmarkets eroding the September contract nearly 30 percent of itsJuly 1 value.

Looking ahead to this week sources point to a cooling trend thatcould “further exacerbate the storage surplus in weeks to come.”The average injection rate over the last 4 American Gas Associationstorage surveys has averaged 78 Bcf leading traders to wonder howmuch gas will be squirreled away in the ground when demandslackens. Analysts are already calling for this week’s report toeasily surpass last year’s injection figure of 55 Bcf furtheradding to the year-on-year surplus. That surplus is cause forconcern from the Pegasus Econometric Group. In their Natural GasReport dated July 31, they calculate that the current surplus of463 Bcf, when projected onto last year’s fall 2,814 peak would meana hefty 3,277 “which is certainly stretching the limit of USstorage capacity.”

However, an analyst thinks the latest CFTC commitment of tradersreport offers a ray of hope to bulls. The report released Friday(see table) shows non commercial traders are now short more than32,000 contracts and have been adding to those shorts since thelast report taken July 21. “People are going to be very cautiousabout initiating fresh short positions based on that report. Thelast time non commercial traders were this was back in June rightbefore the market erupted with a 29.5 cent move higher in justthree days,” he advised. Support still exists at the March 1997low of $1.78, a chartist said.

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