Feeding off losses incurred late in the day Monday, natural gasfutures slumped lower on expiration day Tuesday as tradersliquidated longs and rolled positions into back months. TheSeptember contract was the hardest hit, tumbling 6.7 cents to gooff the board at $4.618. In doing so, however, September supplantedJune as the month with the highest final settlement price in thecommodity’s 10-year history.

“It could have been a lot worse,” said Tom Saal of Miami-basedPioneer Futures. “We tested lower at the open but could not breakthrough [Monday’s] low at $4.57. After that, the market was quietthe rest of the day.”

It is rare for out months to upstage the prompt month,especially on expiration day, but that is exactly what happenedyesterday. While September was held in check by low volatility andan extremely tight trading range, traders turned their attention tothe 2001 summer strip, which advanced a penny to $3.834. For Saal,this buying interest can be chalked up to storage players sensingvalue in next year’s injection months. “The sticker shock isbeginning to wear off. Storage operators are beginning to realizethat in a bull market, locking in next year’s injection months atthis year’s prices may not be such a bad idea.”

He may have a point because the average of the settlement pricesfor the summer strip thus far (April-September) is $3.867, just afew pennies above where the 2001 summer strip was priced as ofTuesday’s close.

Looking ahead, traders will take a short break from bidweektrading today to focus on the latest storage data to be releasedfrom the American Gas Association about 2 p.m. (EST). Due touncertainty surrounding the size of the withdrawal in the WesternConsuming Region, market expectations for the report varied widely.Preliminary predictions first centered on a minuscule 35-45 Bcfinjection Tuesday, but were raised gradually to the 40-60 Bcfrange, a trader told NGI. Last year the market stuffed 69 Bcf intothe ground and the five-year average refill is 71 Bcf.

In daily technicals, October has support at last week’snear-month low of $4.41. On the upside, resistance is seen at the$4.84 all-time high water mark for a near-month contract.

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