NGI Archives | NGI All News Access
Near-Month October Debuts With Strong Up-Tick
October Henry Hub futures appeared likely to continue lastweek’s downward correction early yesterday in its debut as the newnear-month contract. It opened down nearly 4 cents and took anearly step backward to $2.860, but local buying prompted an11.5-cent intra-day surge to a high of $2.975. The contract settledat $2.969, up 4.7 cents on the day, and the relatively strongup-tick continued during the after-hours Access trading session,with October inching up 1.6 cents to $2.985 as of 6:30 p.m.
Like many observers, Ed Kennedy of Miami-based Pioneer Futuressaid he expected more selling yesterday and still believes there’ssome room for October to fall off. “I guess the main feature waswhere were the sellers,” he said. “I fully expected them at $2.91and definitely at $2.95. They’ll probably be in Tuesday, but theywere not in [Monday].”
A number of other analysts have projected the correction wouldcontinue into this week. But John Saucer of Salomon Smith Barneysees some sideways trading over the next week with a bottom notlower than $2.85.
“The market was trading $3.15 a couple of days ago,” Saucernoted. “It was trading near $2.85 this morning. I would suspectgiven the price activity on Friday going into expiration, with themarket rallying back strongly in the p.m. session, and the factthat we bounced back today, that a lot of people think $2.85 lookscheap. The question is where will they be comfortable selling itagain. I think initially at $3, and that’s why I think we’ll havesomewhat of a sideways range here for the short-term.”
Saucer believes, however, that given yesterday’s strength itwon’t be long until the market resumes its rally. “I think thewash-out of much of the length has already occurred, and in factthere’s evidence in the open interest that a lot of people gotshort on the way down during the last couple days in particular sothere may be quite a few people that are short in the sub-$3 area,which is something to watch out for because if the market doespenetrate $3 there could be a little bit of a scramble by shorts.”
Looking ahead at all the fourth-quarter contract months, Saucersees the mid- to high-$3 as very likely. “I don’t think this marketis done. I think it’s just taking a breather. Price highs for thenext couple months are not yet in place.”
©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |