Under heavy pressure from near record-setting high temperatures,the natural gas market caved in yesterday as traders continued toliquidate long positions. After opening at $2.80 the Decembercontract was hit with a Microsoft-like drop, breaking through keysupport levels at $2.74 and $2.70, to finish off 21.9 cents at$2.665.
A New York analyst was quick to note that even the sell-off thathit Microsoft Corp. early yesterday was not as brusque as the morethan 7.5% loss in natural gas futures. Then again, the Departmentof Justice had nothing on Mother Nature as temperatures soared intothe 70s and 80s Monday over a wide swath of the middle of thecountry. And for many traders, that was more than enough put themin the selling mode. “When we came into November, the weather wasguilty [of being normal] until proven innocent. Now, only a weeklater, it is innocent, until proven guilty,” a Houston risk managersaid. A Dallas-based marketer added that because of theThanksgiving holiday, time was running out in a hurry for theDecember contract, which expires on November 24.
Looking ahead, beleaguered bulls hope the weather and priceswill turn around sooner rather than later. Although the highpressure ridge that is bringing much of the country its IndianSummer is due to hover over the East for the next several days, acooling trend is expected by week’s end. According to the NationalWeather Service, below normal temperatures are headed to the EastCoast, and into Mississippi and the Ohio River Valley beginninglater this week. Included in the protracted area of below-normaltemperatures is an area of much-below normal temperatures acrossSouthern Virginia and the Carolinas.
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