Bearish

The October aftermarket got going on a moderately bearish note Wednesday, but in nearly all cases the losses were quite a bit smaller than Tuesday’s September-ending quotes, which saw double-digit declines at all points. A bit of extra chill and the previous day’s gain of 4.5 cents in the first prompt-month trading by November futures may have helped spur increases at several points, mostly in the West, but weak weather fundamentals continued to deny increases in most of the East.

October natural gas futures went off the board on Monday with a bearish bang as values dropped under the weight of the recent advance. October slid 25.5 cents on the day to terminate at $3.730, while the November contract wasn’t nearly as weak in trimming 11.8 cents during the regular session to $4.830.

October natural gas futures exploded higher once again on Wednesday, and with the bearish fundamental picture remaining unchanged, market participants were attempting to identify a catalyst. While some were convinced that the recent activities of the United States Natural Gas Fund (UNG) played a role, others saw the extended rally as nothing more than a wave of fund short-covering.

Several scattered flat to as much as about C20 cents higher points kept price movement mixed Tuesday, but not by much. More bearish signals were emerging as only one of the locations that wasn’t softer was up by more than about a nickel, and a moderate majority of the cash market recorded losses ranging from 2-3 cents to about 15 cents.

With bulls unable to latch on to any real supportive fundamentals other than some pockets of hot temperatures in Texas, the South and the West, August natural gas futures continued plumbing the downside on Tuesday. The front-month contract put in a low of $3.798 in morning trade before closing the regular session at $3.835, down 10.9 cents from Monday’s finish.

July natural gas futures posted a healthy gain Wednesday as traders acknowledged the likelihood that in spite of bearish fundamentals the market has put in a bottom and also observed new buying. July futures rose 12.4 cents to $4.253, and August gained 11.2 cents to $4.424. July crude oil added 56 cents to $71.03/bbl.

Some may be starting to wonder if it’s a smoke-and-mirrors magic act, but the cash market once again defied what would usually be considered bearish weather fundamentals in continuing to rise at all points Tuesday. It retained substantial prior-day support from June futures having jumped another 17.9 cents Monday, but such positive guidance will be lacking Wednesday after the Nymex contract retreated by 11 cents Tuesday (see related story).

Not surprisingly on the day after storage news got even more bearish than before and caused a plunge of 38.3 cents by April futures, cash numbers fell at all points Friday. Except for the Rockies, Western Canada and a few sections of the Midwest, freezing lows were continuing to disappear from the overall forecast. The usual weekend decline of industrial load was a slightly negative factor in Friday’s market.

April natural gas futures plunged at the close of trading Friday amidst a flurry of spread trades that sent out bearish vibrations and cast doubt about further gains in the April contract. April futures lost 6.3 cents to close at $3.932, and May dropped 4.9 cents to close at $4.006. April crude oil shed 78 cents to close at $46.25/bbl.