Control

Pressured by forecasts calling for temperatures to crest the 50-degree mark in the Northeast this weekend, natural gas futures continued lower Tuesday as bulls appeared increasingly content to ignore the expiring March contract in favor of the spring and summer months.

In concert with the downtrend now in its seventh week, the natural gas futures market stumbled lower Monday as traders returned from the weekend to weather forecasts suggesting the month of March would blow in more like a lamb than like a lion.

Despite a bullish storage report (111 Bcf withdrawal) and a corresponding price spike at mid-morning, the natural gas futures market dropped lower for the third session in a row Thursday. While bulls still have plenty of ammunition left at their disposal, Thursday’s price action was a strong endorsement for the bears and traders look for modest softness ahead of the weekend.

The cash market on Wednesday was jerked around like a bull whip by its out-of-control master, the gas futures market on the New York Mercantile Exchange. As futures popped nearly 40-cents higher at the open and soared to the incredible height of $7.55 Wednesday morning before collapsing shortly thereafter, the cash market was dragged behind, albeit at a significant distance. The run-up produced massive trading ranges as sellers scrambled to unload what they could before the show was over.

While Nymex screamed out of control Monday, with the January contract moving 76.7 cents higher to $6.930, the cash market largely sat back and watched in shock. Most cash points ended the day down about 20 cents in delayed response to Friday’s futures slide and the short-term forecasts in the Northeast for a little bit milder weather by Wednesday. Cash trading on Tuesday, however, almost certainly will be a different story.

Industrial gas customers and Illinois utilities have jumped to the defense of Natural Gas Pipeline Company of America (NGPL) in the wake of a FERC order, which they argue appears to restrict the ability of the Kinder Morgan pipeline to keep potentially dangerous high-Btu content natural gas from entering its system in production and market areas.

Industrial gas customers and Illinois utilities have jumped to the defense of Natural Gas Pipeline Company of America (NGPL) in the wake of a FERC order, which they argue appears to have restricted the ability of the Kinder Morgan pipeline to keep potentially dangerous high-Btu content natural gas from entering its system in production and market areas.

Similar to the price action in Friday’s abbreviated trading session, natural gas futures failed to hold onto morning advances Monday and ultimately closed in the lower half of the contract’s daily trading range. The only real difference between the two sessions was the net change for the day, with Monday’s modest, 3.5-cent advance and $4.883 settle contrasting Friday’s 4.3-cent decline. Volume was weak again Monday with an estimated 40,049 contracts changing hands.

As anticipated, the bears regained firm control of the cash market Friday following a flat to mildly softer Thursday. They had little trouble in doing so, aided by the previous day’s screen dive in response to the storage report, unseasonably mild weather throughout much of the East, and the slump in industrial load that typically accompanies a weekend. Even a weekend burst of highs reaching the low 90s in parts of the Northeast was unable to avert drops of 20 cents-plus at regional citygates.