Data

With almost 40 of the largest public producers reporting year-end 2001 reserve data — representing two-thirds of total domestic gas production — Salomon Smith Barney (SSB) determined in a report issued last week that only 101% (120% excluding revisions) of production was replaced by new reserves in 2001. By comparison, this same group replaced 131% of production (101% excluding revisions) in 2000. However, proved undeveloped natural gas reserves (PUDs) rose, which failed to add to the reserve base.

March madness continued at the New York Mercantile Exchange Wednesday after the American Gas Association (AGA) announced that a whopping 140 Bcf was pulled from underground storage facilities last week. Despite coming at the high end of the 110-140 Bcf range of expectations, the withdrawal initiated a selling surge that dropped the April contract to $2.87 just moments following the release of the report. The April contract closed at $2.87, down 14.8 cents for the session and just off its $2.85 low etched just before the close.

Natural gas futures continued to defy gravity Wednesday afternoon as traders refused to sell the market despite the announcement by the American Gas Association (AGA) that only 64 Bcf was pulled from storage last week. That lack of selling pressure combined with the cold temperatures across much of the midwestern and eastern United States gave bulls the confidence they needed to boost the April contract higher on its first day as the prompt contract. April finished at $2.427, up 3.8 cents for the session and just off its high for the day at $2.44. At 71,577 contracts, trading volume was light.

Adding to the losses triggered by the release of fresh American Gas Association storage data Wednesday, natural gas continued lower early in the session yesterday only to stabilize at midday as scale-down buying interest met equally with profit-taking long liquidation. The March contract finished the session at $2.186, down 5.9 cents for the day, and just off its three-day low at $2.18.

In a typical display of its ability to shrug off undeniably bullish information, natural gas futures turned lower Wednesday afternoon following the announcement that a whopping 156 Bcf was pulled from underground storage facilities last week. After surpassing its Jan. 17 high of $2.38 to reach a new 5-week high at $2.41, the March contract plummeted 16.5 cents in 25 minutes to finish at $2.245, down 6 cents for the session.

Adding to losses suffered following the release of fresh storage data Wednesday, natural gas futures continued lower Thursday as traders managed to look past the Enron debacle to focus on the wealth of fundamental and technical factors — all of which point to lower prices. Following in the footsteps of the December contract, January shuffled lower in an organized manner Thursday to close with a 17.1-cent loss at $2.561.

In tandem with heavy losses in the nearby crude oil and related products markets, natural gas futures shifted lower Wednesday as traders weighed the impact that fuel switching could have on prices this winter. The latest storage report from the American Gas Association (a 7 Bcf injection) rocked prices first lower and then higher, before the December contract finished the session back in the middle of the its daily trading range, down 4.4% at $2.676. December crude oil futures finished with an 8.6% loss at $19.80, its lowest close on a spot month basis since July 1999.

Armed with bearish technical data and fundamental news, traders at the New York Mercantile Exchange wasted little time yesterday as they pressured natural gas futures back below the psychologically important $3.00 mark. Selling was seen from the outset Monday, as traders initiated the daily session with a whopping 14-cent, gap-lower open on the daily chart. The December contract never recovered, sifting lower through the morning only to move sideways during the afternoon. The prompt month closed at $2.922, down 32.6 cents for the day.

Despite bearish storage data and the formation of a tropical storm in the northwestern Caribbean Sea Wednesday afternoon, natural gas futures shuffled mostly sideways Thursday as neither bull nor bear was willing to propel the market very much in either direction. After being held to a relatively-tight, 15-cent trading range, the December contract finished a tenth of a cent lower at $3.29. Estimated volume was 73,349 contracts.