Fueled by strength in the overnight Access trading session,natural gas prices moved higher Friday morning as traders coveredshort positions acquired during the market’s 30-cent move lowerlast week. However, after peaking at $3.93 in the first hour oftrading, the bears went back to work and were ultimately successfulpushing the market lower on the day. The August contract finishedthe session down 2.6 cents at $3.834 in a session that saw anextremely-light, 48,413 contracts change hands.
Bearish
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Cash Crash Likely After Screen Acts Bearish on Storage
Pardon the cash market if it was getting that old sensation ofdeja vu Wednesday. In an almost exact repeat of a week earlier,prices were rising somewhere in the vicinity of a dime in mostcases; but once again the screen took a dive following theafternoon storage report, prompting sources to predict today’strading will emulate the double-digit declines of last Thursday.
Futures Crumble Amid Bearish Storage Report, Outlook
The price see-saw continued yesterday in the natural gas pit atNymex as traders made quick work of Tuesday’s advance with a latesession sell-off. The August contract was dealt the most severeblow, tumbling 16 cents to finish at $3.884. Estimated volume wasmoderate, with 71,148 contracts changing hands.
Futures Re-test $4.00 on Mild Weather, Bearish Technicals
Natural gas prices again came under selling pressure Monday astraders dealt with below-normal temperatures both outside theirwindows and also in the forecast. After gapping lower at the open,the August contract sifted lower throughout the session and dippedbriefly below key psychological support at $4.00 before closing at$4.002, 14.8 cent lower on the day.
AGA Changes Storage Report, Highlights 5-Year Average
In a move that had an immediate bearish impact on the naturalgas market last week, the American Gas Association (AGA) decided tobegin publishing a five-year average of gas storage levels in itsweekly storage report. Since the five-year average is much closerto current levels than last year’s abnormally high working gaslevels, the new information gave the market a much different viewof industry fundamentals. The combination of the new average andlast week’s huge 97 Bcf injection knocked nearly a quarter offAugust futures prices on Wednesday.
Short-Covering Puts Bulls Back in Driver Seat
After tumbling 5% on the release of a bearish storage reportWednesday, the natural gas market clawed its way back up yesterdayas locals were forced to cover shorts after watching stubbornsupport in the $3.90s hold yet again. With that buying pressure,the August contract finished 13.5 cents higher at $4.166, recoupingmore than half of Wednesday’s losses.
Bearish Storage Figure Expected to Quash Price Rally
Prices went up by about a dime or more at nearly all pointsWednesday, but sources were in consensus that the brief marketfirmness will not continue today.
AGA Changes Storage Report, Highlights 5-Year Average
In a move that could have a near-term bearish impact on thenatural gas market, the American Gas Association has decided torelease a five-year average of gas storage levels in its weeklystorage report. With current storage levels significantly behindlevels last year, the decision to publish an average that is muchlower than levels last year will give the market a much differentview of industry fundamentals.
Bearish Fundamentals Too Much for Storage Bulls
It is a trader’s rule of thumb not to go home for a long holidayweekend with a large long or short position because of thepotential for fundamental or political forces to produce a severeprice move when the market reopens. Yesterday’s energy complex wasa textbook example of this rule.
San Juan, California Rise Above Sea of Softness
San Juan Basin and California were conspicuous Monday as theonly markets swimming against a bearish tide. All other cash pointswere falling by anywhere from a penny or two (Southwest/Rockies) to15 cents or more, with the majority of declines tending to bebetween a nickel and a dime.