Fueled by constructive storage data and higher Access andover-the-counter prices, natural gas futures continued higheryesterday, as traders continue to exhibit a seemingly insatiableappetite for long positions. The June contract advanced 16.3 centsto close at $4.236.
“We made the opening call,” a Houston risk manager said afterwatching Thursday’s opening price surpass over-the-counter dealsdone just moments earlier. “The opening has made all the differencethis week. On the Monday and Tuesday, the market missed the openingcall and traded lower, but [Wednesday and Thursday] the market madethe opening call and moved easily higher.”
Another price-positive factor yesterday was market-on-close MOCbuying, which was said to have “outnumbered MOC selling by a 3 to 1margin.” Growing in popularity, MOC orders are placed during thelast 2 minutes on the second- and third-to-last trading days beforea contract expires and during the last 30 minutes on expiration dayin an attempt to closely replicate the average of the last threetrading days. Because of this influx of buying and selling theprice can move significantly at the close.
“We were trading at $4.02-03 at 2:00 P.M. (CDT) [Wednesday] andthen the market just took off. The same sort of thing happenedagain [Thursday] when a disproportionate number of buy orders hitthe market late,” the aforementioned trader said.
Looking ahead, traders are mixed as to the direction the marketwill take heading into the expiration day. Last night’s Accesstrading session had something for everyone as prices drifted loweronly to rebound to trade just north of the June’ $4.236 close. “Itis easy to make the case that we will test $4.40 [Friday], but Ithink that task will have to wait until the July contract becomesthe prompt month,” a source told NGI. “In the meantime, I think wewill see some profit-taking tomorrow,” he said.
Whatever direction the market takes today, it must do soexpeditiously. All Nymex energy markets close at 1:00 P.M. (EST)with the exception of Palo Verde and California-Oregon Borderelectricity, which close at 12:55 P.M. (EST).
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