After posting losses in the Tuesday evening Access session, theJuly Nymex contract gapped lower on the open yesterday, thencontinued to falter closing at $2.106, down a nickel. The contractwas held within a tight 4 cent range between $2.095-135 whichalmost identically mirrored Henry Hub cash prices on the day.Estimated volume was 41,493

The similarities between the cash and futures market were nocoincidence and a Houston trader went as far as to describe the twomarkets as complementary on Wednesday. “Futures traders came inthis morning scratching their heads wondering whether or not totrust the price erosion registered in Tuesday’s Access trading. Then cash traded at $2.11 and futures followed suit. The rest ofthe day saw good convergence between the markets.

However, the real drama unfolded upon the release of the weeklyAGA storage estimate. That report, featuring an injection of 106Bcf, was felt immediately when evening Access trading ushered theJuly contract down an additional 5.6 cents to $2.05. Total U.S.underground storage is now 52% full and 466 Bcf above year agolevels creating a “storage glut” some analysts feel could seriouslyimpact the buying patterns of utilities going into the winter.”With front end demand for storage gas pushing this year’sinventories well above those levels of a year ago many traders arelooking very cautiously at August, September and October. Those arethe months the utilities typically are active buying gas for thewinter months. With the abundance of storage available they couldvery well become discretionary buyers stepping into the market whensevere heat or hurricanes hit.”

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