Punctuating Monday’s 32.6-cent price slide, natural gas futures probed lower Tuesday, as traders initiated the session by demoting the market to its second straight gap-lower open. Prices shuffled lower throughout the morning, augmented by a boost of selling pressure, as the December contract broke beneath the $2.835 low from Oct. 24. However support held and the prompt month retraced a portion of those losses in the afternoon to close with a 4.2-cent loss at $2.88.

Traders continued to point to the overwhelmingly bearish one-two combination of diminished storage injection demand and mild weather as reasons for the market’s steep descent this week. Adding credence to that belief was the release yesterday of the short-term energy outlook by the Energy Information Administration (EIA), stating “fundamentals are simply not there for a significant sustained rebound in prices” this year and next (see related story this issue). But while the sentiment in the market was near unanimous yesterday, traders admitted that the market was still a little apprehensive ahead of today’s release of fresh storage news.

Consensus estimates ahead of that report call for a net injection in the 20-30 Bcf range, which falls in line with the 25 Bcf and 23 Bcf injections seen in the last two reports. However, some estimates range as high as 40 Bcf, and traders are quick to note that a injection of that magnitude would surpass last year’s comparable 36 Bcf figure, thereby serving to expand the 378 Bcf year-on-year surplus.

Based on heating degree day data for last week proving the weather was warmer than usual, Thomas Driscoll of Lehman Brothers looks for the American Gas Association to announce an injection of 25 Bcf. Looking ahead, he predicts the AGA next week will announce an injection of 10 Bcf, compared to a net withdrawal of 6 Bcf a year ago.

Jay Levine of Advest Inc. agrees with Driscoll’s 25 Bcf estimate for today’s report and suggests that it will take an injection in the teens to prompt a rally back towards the $3.00 level. Even then, Levine believes the gains would be short-lived and looks for the market to fall under the weight of plentiful supply and mild weather.

©Copyright 2001 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.