Similar to the price action in Friday’s abbreviated trading session, natural gas futures failed to hold onto morning advances Monday and ultimately closed in the lower half of the contract’s daily trading range. The only real difference between the two sessions was the net change for the day, with Monday’s modest, 3.5-cent advance and $4.883 settle contrasting Friday’s 4.3-cent decline. Volume was weak again Monday with an estimated 40,049 contracts changing hands.

With eyes focused on whether the cash market would receive a boost from buyers who were forced to turn back supply amid last week’s blackout, futures traders took a wait and see approach Monday. As it turns out, most cash prices were stronger in early trade, and that gave futures bulls the rationale to bid September futures higher. Futures opened the session at $4.92, just a couple cents off NGI’s Henry Hub index Monday.

However, once the bullish euphoria wore off and traders had a minute to survey the fundamental landscape, selling became the order of the day. The market experienced two waves of profit-taking Monday, the latter of which left the September contract just off its daily low at $4.86.

Market-watchers had their pick of influences to explain the late-session softness. Medium-range forecasts continue to call for below-normal readings in the Southeast U.S. and average daily temperatures are expected across much of the middle of the country, the Mid-Atlantic and southern New England. Only the West and a narrow sliver of the northern reaches of the Great Lakes and New England will see above-normal mercury levels this weekend and early next week, the National Weather Service said.

On the supply side, storage remains a bearish factor. Expectations call for this Thursday’s storage report to feature a 75-90 Bcf injection, which would dwarf the year ago refill of 37 Bcf, as well as the 57 Bcf five-year average. Last week the market dropped 30 cents upon learning that 82 Bcf was added to the ground the week prior. Thomas Driscoll of Lehman Brothers in New York has factored in 2-5 Bcf of lost demand into his injection prediction, which at 75 Bcf rounds out the low end of expectations.

Meanwhile, Kyle Cooper of Citigroup remains bearish on storage and looks for prices to duck below the $4.50 level in the coming weeks. Although he warns that another winter like last winter could bring significantly higher prices, he feels that is unlikely. Cooper remains short two $6.00 calls from an average price of 25 cents.

©Copyright 2003 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.