Chop

With sellers content with last week’s 50-cent price erosion, and bulls desperately clinging to the last vestiges of support, natural gas futures marked time Friday, with prices moving quietly sideways on mostly unchanged fundamental and technical factors.

For the third-straight trading session, natural gas futures tumbled early, but quickly stabilized Monday as traders continue to view the market with apprehension. On one side is the market’s seasonal tendency to rally in September; on the other is the bearish storage and weather outlook.

Natural gas futures reversed direction again on Wednesday — this time to the upside — on short covering by local traders ahead of Thursday’s release of fresh storage data. With Wednesday’s 6-cent advance, the July futures contract remained unable to register a back-to-back daily increase or decline for more than a week. It closed at $5.757, close to the middle of its recent $5.46-6.12 trading range.

Buoyed by concerns over two possible disturbances in the Caribbean Sea and supported by continued technical bullishness, natural gas futures chopped higher Monday as scale-up commercial selling was supported by moderate fund buying. At $3.507, the October contract was up 4 cents for the session and within striking distance of its four-month high at $3.685. With some local traders out in observance of Yom Kippur, volume was weak in the pit, with estimated volume only registering just 66,195 contracts.

After opening higher but failing to test resistance at $4.38, natural gas futures checked sideways yesterday as traders caught their breath after Monday’s 25-cent price-erosion. During the open-outcry session Tuesday, the prompt June contract closed at $4.279, just about equally between Monday’s $4.239 close and its $4.32 high.

After opening higher for the second day in a row, natural gas futures were left to chop lower as many traders elected to wait patiently on the sidelines ahead of fresh storage data from the American Gas Association. Trading picked up a little after the report was released (a 49 Bcf withdrawal), but even that was unable to propel the May contract outside of its recent trading range. By virtue of its $5.182 close, the prompt month for the second day in a row finished stronger on the day, but below its opening trade.

Like a bouncing ball, natural gas futures continued to chopsideways yesterday as scale down buyers took advantage of lowprices afforded them by the market’s dip Wednesday. The Augustcontract finished up 3.3 cents at $2.179, and in doing so continuedits five-day streak of alternating advances and losses.

MCN Energy said yesterday it has had to chop millions from its 1997and 1998 earnings reports and raise slightly its 1Q99 results becauseof deliberate financial miscalculations by several former employees atCoEnergy trading, its unregulated gas marketing subsidiary. MCNdiscovered the problem last month and fired three employees, includingtwo subsidiary officers (see Daily GPI, May18), for falsely showing good financial results from marketing.

ARCO announced a major cost reduction program last week thatwill chop $500 million in before-tax expenses and 900 employeesfrom it operations over the next two years. The majority of thecut-backs, $350 million, are expected in 1999.