Bulls

After a choppy week of range-bound trading, bulls foundthemselves in the driver’s seat Friday at the New York MercantileExchange when weather forecasts and technical factors came intoagreement. Given the opportunity it didn’t take long forspeculators, comprised mostly of local traders, to become buyers inan attempt to push the August contract through resistance tobuy-stop orders that they knew were waiting in the $2.21-22 area.However, what they failed to realize was that there wasconsiderable commercial selling waiting there as well, it proved tobe more than enough to satiate the buying demand. The Augustcontract notched a $2.225 high shortly after 1 p.m. (EST) only tocome crashing back to settle at $2.187, an 0.8-cent advance for thesession.

After cascading nearly 15 cents lower Tuesday and Wednesday,natural gas futures rebounded yesterday as traders ignored thebearish technical picture and focused instead on constructivefundamental factors. The August contract slipped at the close, butwas still able to post a 2.1-cent advance for the day to $2.162.

Activity in the natural gas pit at NYMEX has beenuncharacteristically quiet recently with low volatility and sub-5cent trading ranges the rule rather than the exception. In fact,the only real excitement in the past couple of weeks came Mondaywhen the July contract bounced 3 cents in a late rally. But eventhat was quickly dismissed by many traders who considered itnothing more than a freak, expiration-day anomaly in an otherwisesubdued market. Enter the August contract, which wasted little timeyesterday in moving dramatically higher in a rush of speculativeand commercial buying. The newly crowned prompt month finished up7.6 cents for the session at $2.400.

The stage was set for expiration day pyrotechnics Monday at theNew York Mercantile Exchange. Bulls were confident they could addto the string of five higher highs and higher lows notched on thedaily charts last week. On the other hand, bears believed theconfluence of mild temperatures and follow-through on the heels ofFridays price erosion would set the tone early yesterday. They wereboth wrong. Except for a late and almost inconsequential bliphigher, the July contract was a model of stability yesterday, wherebuying and selling matched up nearly perfectly. July closed out itstenure as spot month up a meager 0.4 cents to settle at $2.262. TheAugust contract finished up 3.2 at $2.324.

After being hit with a devastating combination of bearish newsFriday afternoon and Monday morning, traders at the New YorkMercantile Exchange had little choice when the market reopened. TheJuly contract took it on the chin, gapping lower on the open beforeposting a 7.1-cent decline to finish at $2.237. The August contractdid not fare any better, slipping 6.9 cents to $2.268. Estimatedvolume was solid with 78,116 contracts changing hands.

For the second trading session in a row, early selling pressurewas reversed in afternoon trading allowing the market to close nearits daily high. The July contract notched a $2.325 low both Fridayand Monday, but settled back up above $2.37 both days. Evenestimated volume figures were similar with yesterday’s 43,630falling just short of Friday’s 45,070 mark.

Follow-through on last week’s gains and record-settingtemperatures put bulls squarely in control Monday in the Nymex gaspit. Locals and commercials were good buyers in the first hour oftrading yesterday as they buoyed the market to its highest level insix months. However, after the initial surge the market could notattract fresh buying and was left to chop sideways amid arelatively light 59,236 in estimated volume. The July contractfinished at $2.442, up 0.5 cents for the day.

“Buy the rumor, buy Access; then sell on Thursday,” was onetrader’s variation on the almost clich‚ “buy the rumor, sell thefact” trading strategy. However, that variation would have beenprofitable considering the market’s price action both before andafter the release of the storage report Wednesday evening. Afterbounding as much as a dime higher in the regular open outcry andAccess trading sessions Wednesday, the futures market was shuffledlower yesterday. The July contract finished at $2.397, off a pennyfor the session.

“Close, but no cigar,” was one trader’s apt description of theprice action yesterday in the natural gas pit at the New YorkMercantile Exchange. A session that saw the prompt month unable tobreak stubborn resistance near $2.40. After an early dip, the Julycontract spent much of the session near its $2.39 high beforeplummeting lower at the close. July finished at $2.343, down 1.5cents.