After testing both the upside and the downside during the firsthour of trading, the futures market chose the middle road yesterdayas many traders waited on the sidelines ahead of the weekly storagereport. As a result, the November contract did not stray very farfrom center and finished the session up 1.5 cents at $2.601.
Although it was a just a small advance, bulls were happy withwhat they could get following a two-day, 21-cent price slide. AHouston risk manager attributed the market’s ability to hold itsground yesterday to buoyant Gulf Coast cash prices, which seem tohave latched on to values in the $2.40s. “Cash is showing some lifeand that has helped to dissolve some of the 45-cent spread betweenit and futures.” He noted both industrials and utilities are seeinggood value at these levels in both the futures and cash markets.”They can buy each month of the winter strip lower than they couldin September. And at the same time it makes sense to top off theirstorage reserves.”
The American Gas Association said working gas in undergroundstorage increased 62 Bcf to 2,887 Bcf for the week ending Oct. 1.With that refill, storage injection figures have eclipsed lastyear’s pace for six weeks in a row, serving to virtually eliminatethe year-on-year deficit, which now stands at just 24 Bcf. Butdespite that seemingly bearish supply scenario, the bullscontrolled the activity at Nymex last night in after-hours Accessdealings. As of 7 p.m. the November contract was 7.4 cents higherat $2.675. “They were ready to take this thing higher regardless ofwhether we got a 60 or a 90 Bcf injection,” said the risk manager.”This thing was oversold, and they just needed a reason.”
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