In almost an exact blueprint of Friday’s topsy-turvy session,natural gas futures spiked then retraced yesterday as tradersdigested the latest weather news. After gapping higher at the openand putting in a fresh one-month high at $4.43, the Septembercontract succumbed to profit-taking which ushered the prompt monthlower at the close. September finished at $4.348, up 5.2 cents forthe session, but just a fraction of a cent above its low on theday.
Several floor traders said fund selling above the $4.40 levelwas responsible for the price ceiling seen yesterday. “We saw somegood selling today by funds who regretted not cashing in at thehighs Friday. When the market moved right back up [Monday], it washard for them to resist,” a trader explained. Also a factor Mondaywas resistance, which at $4.41, was breached on an intra-day basisbut not on a settlement basis.
However, technical factors were just a subplot yesterday. Themore significant factor was the birth of the seasons first Atlantichurricane. As of last night, Alberto was located about 1240 mileseast of the Leeward Islands and moving toward the west at 14 mph.Maximum sustained winds were near 90 mph but some models projectslight weakening during the next day or so. If, however, Albertostays on the forecast track, slight intensification is expected bymidweek. At present, it remains doubtful that the storm will findits way into the Gulf of Mexico.
Another bit of news that bulls were proud of yesterday was thelatest six- to 10-day forecast. According to the National WeatherService, above and much above normal temperatures are expected overa large area of the Northern U.S. from the Rockies to theAppalachians while below-normal temperatures are forecast forFlorida and Southern Texas.
Looking ahead, traders remain somewhat hesitant about holdingoutright long positions despite the threat of hurricanes and hotweather on the horizon. “There is still so much volatility in thismarket and we are already at such a lofty level. From $4.40, thereis a much greater chance of losing a dollar to the downside thanthere is of gaining one to the upside,” a trader reasoned.
In last night’s Access trade, September was up a nickel toretest resistance at $4.41.
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