Despite warming temperatures that already had begun the processof melting snows from Monday’s Nor’easter, the futures market wasable to arrest a further meltdown of its own Tuesday as buyers andsellers were evenly matched. In fact, Tuesday’s price action was soorderly, that not only did the market etch an inside day with highsand lows within Monday’s, but also posted an identical $1.717settlement price. And although some bulls were somewhat reluctantto claim the day as a victory, others viewed the market’s abilityto hold ground following the 25-cent price slide since lastWednesday as promising.
However, a Houston marketer thinks that the truth to the futurespuzzle lies, at least for the moment, in cash prices. “Now that theshorts have been squeezed out of the market, it will take afundamental event to push the market in one direction or theother.” He feels that pressure will be downward and could come asearly as today. “Weather is moderating substantially and utilitiesare turning back volumes. [Cash] prices finished the day at theirlows [Tuesday], that does not bode well for prices [Wednesday],” hecontinued.
And Tom Saal of Miami-based Pioneer futures agrees that thefunds, presumably holding little or no positions, will remain onthe sidelines until a clearer trend develops. “If we are to see anyvolatility, it will be the commercials who provide it.” But Saalremains bullish despite the recent losses and points to storageinjections as the market’s salvation. “Bears keep focusing on therelatively high storage level, but that is yesterday’s news-lookingforward is what the futures market is about. We have about 1.5 Tcfworth of injections that will start to go into the ground in twoweeks — much of which will be hedged using the futures market.People will buy the summer [months] and sell the winter [months] inorder to lock in their cost of carry. That should support andeventually put upward pressure on the market in the weeks to come.”
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