Buoys

Two wrongs do not make a right, but they do make for somevolatility in the natural gas pit. Since December’s precipitousclimb to $6.32 last week, the prompt month has vacillated wildly— first lower and then higher, prompting traders to suggest thosemoves were a little bit overdone. However, last Wednesday’s movehigher received some validation Friday when prices bounced offsupport and erupted higher to once again close in the $6-plus pricestratosphere. After trading within a wide, half-dollar tradingrange, the December contract finished the week strongly, up 30.2cents at $6.10.

Eastern points followed up on Monday’s screen drop of 15-pluscents and subsequent milder softening Tuesday by falling 15 centsor more themselves yesterday. However, the West’s continuing heatwave kept Malin and Rockies pipes generally flat while otherCalifornia points and San Juan Basin were down only a nickel or so.

After touching the lowest level in almost two weeks earlyMonday, the June futures market was bid higher throughout the restof the session as traders took profits from last week’s sell-off.June finished up 5.8 cents for the day at $2.311, just off its$2.32 high.

Plentiful amounts of gas in underground storage and relativelywarm temperatures once again had bears licking their chopsyesterday. But after two attempts failed to push the market lower,short-covering activity propelled the market higher during the lasthour of trading. December posted a 5.2-cent gain to $2.149 Tuesday,and in doing so, became the first contract since March to post again on its last trading day.

For the second day in a row Tuesday, natural gas futuresreceived a strong boost in prices from short-covering activity dueto tropical storm concerns in the Gulf of Mexico. Earl became thefifth named storm in the 1998 Atlantic hurricane season yesterdaywith sustained winds of 60 miles per hour. As of 5:00 P.M. EST Tuesday, Earl was located 240 miles South Southwest of New Orleansand moving toward the Northeast at 12 mph. The October contractopened strong and wasted little time in trending higher before anafternoon sell-off left the market with a modest 3.4 cent gainbefore the closing bell. Estimated volume was a robust 82,172.

Follow-through on the heels of last Friday’s positive tradingsession prompted some mild short covering which bolstered futuresfor the second Monday in a row. The September contract was thebiggest mover, posting a 6.2 cent gain to settle at 1.895 on theday.