Supportive physical prices and concerns over supply tightnesstook center stage yesterday in the natural gas pit at Nymex andthat gave bulls the impetus to post the seventh straight priceadvance. The September contract finished up 2.7 cents at $2.748after notching both a higher high and a higher low for the session.Estimated volume was 77,940 contracts.

“Cash prices again confirmed the futures strength,” said aHouston trader. “Each morning the futures market looks to thephysical market for verification and lately it has gotten the greenlight.” With current prices so far above bidweek levels, utilitiesare taking 100% of their baseload nominations, which reduces theamount of supply available for peaking requirements in the swingmarket, he added.

Preliminary estimates are calling for the American GasAssociation’s weekly storage report to show a 50-70 Bcf netinjection, which would fall short of last year’s 75 Bcf injectionand would continue the trend of the last two weeks. Last week, theAGA reported a 26 Bcf injection for the week ending July 30, whichwas at least 15-20 Bcf less than market expectations and 53 Bcfless than injections during the same week last year. The week priorthe injection of 41 Bcf of gas also was significantly behind thefill rate in 1998.

Resistance for today’s futures session coincides with the $2.81high from December 1997.

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