Although it inched higher to start the week, the natural gas futures market lacked the buying oomph Monday to match crude oil in achieving new highs. The June natural gas contract finished at $6.424, up 2.3 cents for the session, but down nearly a dime from its highs last week. At 81,876, estimated volume was moderate, suggesting the there was ample selling to repel the buying interest.

Since notching a new contract high at $6.52 last Thursday, the market has begun what some market watchers feel is a consolidation period. “It was a lackluster session,” noted Tom Saal of Commercial Brokerage Corp. in Miami. “There were not many buyers out there.”

Other sources polled by NGI were quick to note the gas market’s inability to achieve more than a modicum advance even with crude oil futures notching a new all-time commodity high Monday. After sailing to a $41.75 high shortly after 6:00 a.m. EDT in overnight Access trading the June crude oil contract could not match that level in the regular open-outcry session. It settled with a 17-cent advance at $41.55.

The waning momentum in the hydrocarbon futures, coupled with a growing level of speculative natural gas long positions has caught the eye of at least one natural gas broker. “The non-commercial segment of the market currently hold the largest long position ever recorded at 79,116 positions,” noted Saal. If you combine that with their short position of 55,624, they hold a total open interest of 134,730. That is also a record for the largest open interest position held by the non-commercial segment of the market.

Delving deeper into the numbers, however, Saal is most concerned with the net long position of 23,492, which is withing striking distance of the 32,944 net longs held by the sector back in February of 2003. Because prices peaked just days after the spec sector reached that level of long accumulation, Saal see the chance for a similar reversal here in May 2004. “The market has teetered up at current levels and can’t seem to move higher. We could be in store for a correction,” Saal advised.

©Copyright 2004 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.