Bearish

Mired in a sea of bearish news, natural gas futures traders glommed on to the only available bullish factor Wednesday and rode a buying wave created by an early spike in the nearby crude oil market. The October natural gas contract notched a new $4.66 high for the week by 11 a.m. EDT. Modest position squaring was seen in the afternoon, which allowed prices to ease back to finish the session at $4.588, a 7.7-cent advance on the day.

After a flurry of activity that first dropped and then boosted prices in the first 70 minutes of trading, the August natural gas contract settled down to trade quietly sideways for the remainder of its penultimate trading session Monday. With the contract set to expire Tuesday at 2:30 p.m. EDT, and weather and storage outlooks unchanged from last week, neither bull nor bear were willing or able to exert a price move in their favor.

With a southeastward-moving cold front starting to wipe out much of the eastern heat that had boosted prices as the week began, the cash market continued to decline Thursday except for some flat to barely higher San Juan/Rockies numbers. In most cases, however, the drops were smaller than those of the day before. Thursday’s losses tended to range from about a nickel to a little more than 30 cents, with the largest ones being recorded in the Northeast.

With little in the way of fresh fundamental news and plenty of uncertainty ahead of Thursday’s storage report, natural gas futures traders played it close to their vests Tuesday. The July contract had a hard time mustering either a rally or a decline as it managed only an 11-cent trading range. It closed at $5.712, up 0.6 cents for the session. At just 62,296 contracts, estimated volume was light for the second day in a row.

A new summer weather forecast by Weather Services International (WSI) could be bearish for gas prices because of cooler than normal temperatures expected all along the East Coast and throughout California from June through August, which certainly will help to minimize heavy cooling loads and allow greater gas storage injections. However, hotter than normal temperatures in July and particularly in August in the Midcontinent states and Texas will drive up gas demand, helping to offset weaker market conditions elsewhere.

A new summer weather forecast by Weather Services International (WSI) could be bearish for gas prices because of cooler than normal temperatures expected all along the East Coast and throughout California from June through August, which certainly will help to minimize heavy cooling loads and allow greater gas storage injections. However, hotter than normal temperatures in July and particularly in August in the Midcontinent states and Texas will drive up gas demand, helping to offset weaker market conditions elsewhere.

Prices managed to sustain this week’s near-solid upward price movement Thursday, but there were hints that the bullish streak may be coming to an end. New upticks ranged from about a nickel to a quarter, but were mostly moderate at around a dime or less.

After failing to extend to Friday’s $5.33 low following a bearish open, the natural gas futures market rallied Monday as traders priced in data showing it was colder last week than forecasts had predicted.

In a delayed reaction to bearish storage data released Thursday that revealed the first net refill of the 2003 injection season, natural gas futures dipped lower Friday as commercial traders continued to liquidate their long positions. Not even double-digit rises in physical market prices could support May futures, which lacked originality by closing at the same price — $5.146 — as the final expiration of the April contract Thursday. At 44,630, estimated volume was extremely light ahead of the weekend.