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Fueled by growing industrial and power demand for natural gas and the prospects for a cold winter, the Energy Information Administration (EIA) said it expects total gas consumption for the 2002-2003 heating season to rise 12% from a year ago to average 73 Bcf/d. This will prop up spot gas prices during the fourth quarter of the year and into the early part of 2003, but “severe price spikes are not likely” due to the gas cushion in storage, the agency reported.

Pushed by growing industrial and power demand for natural gas and the prospects for a cold winter, the Energy Information Administration (EIA) said it expects total gas consumption for the 2002-2003 heating season to rise 12% from a year ago to average 73 Bcf/d. This will prop up spot gas prices during the fourth quarter of the year and into the early part of 2003, but “severe price spikes are not likely” due to the gas cushion in storage, the agency reported.

Stemming a three-day, 42.6-cent price slide, natural gas futures turned modestly higher Friday as traders covered shorts ahead of the holiday weekend. There also was the outside chance that tropical activity in the Atlantic and the Caribbean could present a threat to gas production in the Gulf of Mexico this week. The October contract gained 4.6 cents to close at $3.296. By comparison, the gains in the winter strip were larger, led by the January contract, which climbed 8.6 cents to finish back above the $4.00 mark at $4.029. At 50,980, estimated volume in the holiday-abbreviated session was weak.

Following a 36-cent rise Monday through Thursday last week, the natural gas futures market braced for a profit-taking sell-off Friday. As it turns out, the market was half right. Locals and commercial traders liquidated their longs ahead of the weekend, but what the market did not bank on was continued short-covering by the non-commercial segment of the market, which soaked up enough selling to limit the day’s losses. September finished at $3.487, down 2.8 cents on the day and roughly in the middle of its $3.44-52 trading range.

The September gas futures contract found its footing on Tuesday after Monday’s 18-cent stumble, but struggled to gain much ground in a relatively quiet trading session. The near-month contract ended the day up 3.8 cents to $2.716 with a high of $2.745 and a low of $2.690. October rose 3.5 cents, and the winter strip inched up to $3.436.

Stemming a two-day, 22-cent price erosion, natural gas futures turned modestly higher in an abbreviated pre-holiday weekend session Friday, as profit taking gave way to a steady stream of end-user buying. The March contract looked poised to hit the $2.12 low notched last Monday, but after sellers ran out of gas early Friday the way was paved for a positive close. At 1 p.m. Friday the March contract settled 2 cents higher for the day and 1.5 cents higher for the week at $2.206.

Breaking out of the extremely-tight, 4-cent trading range that corralled prices for much of the session, natural gas futures moved lower Wednesday afternoon on the heels of a disappointing (for bull traders) announcement that only 124 Bcf was pulled from storage last week. The selling pressure was felt immediately after the 2 p.m. EST release and by 2:30 p.m. February had sunk to a new, life-of-contract low at $2.04. A slight up-tick at the closing bell lifted the prompt month to a $2.076 settle, down 3 cents for the session.

Ending a four-day, 21-cent rally, natural gas futures reversed lower Thursday as weak long traders headed for the exits amid bearish weather news. After opening at Wednesday’s high at $2.40, the prompt month took on the trajectory of a safe pushed out of a 10 story building, falling 14 cents in the first 45 minutes of trading yesterday. From that point forward, February checked to either side of $2.26 on a heavy volume of 123,632 contracts. February closed at $2.254, down 14 cents from Wednesday’s settle.

With a modest 4.1-cent advance and $2.291 close Tuesday, February natural gas futures took another baby step toward what analysts and technicians believe could be the formation of a price bottom. That may seem like a bold prediction considering the overwhelmingly bearish fundamental picture. But after lying dormant during the downward price spiral of 2001, and in consideration of the large speculative short position, bull traders are cautiously rearing their horns once again.