Buck

Following a two-day, 25-cent price slide, natural gas futures rebounded modestly Friday as traders covered shorts ahead of the weekend and in anticipation of cooler temperatures this week. Also supportive on Friday was an up-tick in crude oil prices, which advanced 58 cents to finish at $18.03. The December natural gas contract experienced a similar bounce, gaining 8.6 cents to close at $2.637.

Slowly but surely the faux summer that much of the eastern U.S.has experienced recently is turning into “real summer,” a marketernoted. But even that and a moderate gain by the August Henry Hubfutures contract were not enough to avert softening at most cashtrading points Thursday. Eastern declines tended to be minuscule,with a few points staying flat and few others falling by more than1-2 cents. But an easing of Southwest supply constraints andgenerally cooler weather in the West caused larger price drops inthe West, topped by a loss of several cents in the San Juan Basin.

It is said that first impressions are lasting ones, and bulltraders hope that adage applies also to futures contracts,following the market’s dramatic price rally as February’s debutedas the spot month yesterday. February opened Wednesday at Tuesday’shigh and moved 10.5 cents higher for the day to finish at $1.886.At 44,020, estimated volume was light considering the double digitprice move.

After spiraling down in the last 30 minutes of last Thursday’sabbreviated trading session, the spot January contract gapped lowerand traded in a tight 6-cent trading range Monday as traderscontinued to test the downside of the market. The nearby cashmarket, which was trading 5-10 cents lower on many pipes, had anundeniable affect when the futures market opened at 10 AM EST,traders said. Estimated volume was robust, with 86,466 contractschanging hands.

After briefly testing the downside early Friday, January futuresclawed their way higher and briefly broached the $2.00 level in theafternoon. But a late selloff ensued, which chased prices back downto settle at $1.978, a 1.9 cent gain for the day. Estimated volumewas 72,807.

The October contract began its reign as the prompt month byfollowing in the footsteps of the freshly expired Septembercontract, and in doing so, added to the declines that have markedthe futures market since the downtrend began on April 8th. Thatleft October down 5.2 cents to $1.664 on Friday, capping a 31.7cent decline for the week.

Coastal Corp. was able to buck the trend of poor second quarterearnings by improving refining margins, increasing its gasproduction 22% to 526 MMcf/d and raising its crude oil andcondensate production by 50% to18,063 b/d. The company reportedsecond quarter earnings of $94.6 million, or 43 cents per share, up23% (on a per share basis) from 2Q97 earnings of $79.3 million, 35cents/share.

Nymex futures once again were unable to buck the downtrend andcontinued to slip lower yesterday in quiet trade. The July Nymexcontract opened below $2 before breaking through long-term supportat $1.97 only to claw its way back up near the close. July settledat $1.976, down 5.1 cents for the day. In doing so, July posted thelowest level of any prompt contract since January.