Ending a rocky week of commodity and equity market ups and downs that was dominated by news of the bankruptcy of Lehman Brothers Holdings Inc. and the sales of Merrill Lynch and Constellation Energy, October natural gas futures on Friday ended up quietly closing at $7.531, down 9 cents on the day but 16.5 cents higher than the previous week’s close.

Of note was the complete disconnect from crude futures on the day. Short-lived were the days of sub-$100/bbl oil as the October crude contract shot higher on news of the government’s financial bailout program, which emboldened investors. October crude futures jumped $6.67 on Friday to close at $104.55/bbl.

“Natural gas futures did not follow crude’s lead on Friday, but I think that is because crude has other issues,” said a Washington, DC-based broker. “We are looking at tight stocks in crude and gasoline following Hurricane Ike, so that is something we are going to have to monitor. The other thing a lot of energy traders are taking into account is the U.S. financial turmoil on Wall Street. We got this bounce up in the stock market on Thursday and Friday after hearing about the government’s bailout plan, but the reality is things are not fixed. It is going to take time to get things moving properly again and so I think energy markets will be studying that process.

“Things are looking pretty good for natural gas bears right now. The tropics are quiet storm-wise and there is no real near-term weather to speak of. In addition, demand for natural gas has been reduced due to the fact that Houston is still mostly in the dark.”

Commenting on the recent price action in October natural gas futures, the broker noted that the spike Thursday to a $8.320 high did not even look bullish to her. “All it looks like we have done is relieved oversold conditions. My guess is they are going to try to get it back down and attack support at $7 in the coming week. All of my oscillators have pulled back up into a flat correction, so there is nothing that appears dynamic in the least. The natural gas chart looks very similar to the way the consolidation was before crude took that last dive. I wonder if we may end up doing the same thing.”

In spite of Wednesday’s meteoric 63.1-cent gain posted by October futures, traders see a market languishing in a wide trading range. Jim Ritterbusch of Ritterbusch and Associates said he was surprised by the large futures drop on Thursday’s 67 Bcf storage injection report. He said the move “reinforced our expectations of a market destined to spend more time within the $7-8 trading range.”

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