Thursday night’s Access gains, and higher prices in both theover-the-counter and cash market set the stage for the May futurescontract to blast off Friday. In fact, the buzz around the pit atNymex early Friday centered on when, not if, the prompt month wouldfill in the chart gap up to $2.19. But despite all the hoopla andbullish sentiment, the May contract could manage only a half-pennygain from its $2.16 open, leaving the market to trend lowerthroughout the rest of the day. May finished 1.3 cents lower at$2.124.
A Houston marketer thinks a lot can be learned by looking at theprice action over the last few days. “The funds have been theactive ingredient in this market. On Wednesday, they were extremelyshort, forcing the market to $2.075 and [Friday] they wereextremely long, leading the charge to $2.165. However, in bothcases they received little or no help from either trade buying orselling and so they were unable to influence a move outside of thetrading range.” Having said that, he feels the market may havefound fair value in the $2.10-14 level until it can latch ontosomething fundamental for direction.
Natural gas has endured three winters in a row of above normaltemperatures, but Mother Nature may leave its mark on prices yet.The esteemed Colorado State hurricane forecaster William M. Graypredicts there will be 14 named storms during the Atlantichurricane season, which is dramatically more than average of 9.3(see full story that follows).
And although most would agree hurricane hype has yet to beimbedded into the futures market, one trader said he had seen itsimpact in the forward market. “There has been a real unwillingnesson the part of sellers to offer term gas for the summer monthsbecause of how bad they were burned last August and September whengas was shut in. The only term deals out there are carrying a bigpremium and nobody is interested in paying up.”
And in addition to the possibility of an active hurricaneseason, the market is starting to weigh the possibility of warmerthan normal summer. By looking at sea surface temperatures in boththe Pacific and the Atlantic Oceans, Fred Gesser of Omaha-basedStrategic Weather Services expects the next three months to featuregenerally above-average temperatures in the Central U.S. andPlains. However, that will be countered by normal to below-normaltemperatures in the Northeastern U.S., Gesser continued.
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