Dime

Spot prices inched higher by a few pennies to a little more than a dime at most locations nationwide Monday compared to weekend levels, and basis tightened a bit with help from the 10.5-cent drop in near-month futures. But many observers still were left wondering how the huge basis chasm will be closed before the November contract goes off the board.

After dropping a dime in a knee-jerk reaction to slightly bearish storage data (42 Bcf injection) released at 10:30 a.m. EDT, natural gas futures chopped sideways for the rest of the session Thursday as traders groped for fair value in a market that has witnessed a 58-cent trading range since Oct. 1. As it turned out, nothing was settled, with about half the traders, brokers and analysts surveyed by NGI yesterday expecting higher prices Friday and half looking for more weakness. The November contract closed at $3.828, down 9 cents for the session and just above support at $3.795.

Prices ranged from flat to about a dime higher in nearly all cases Thursday. Most gains were generally small at around a nickel or less. Only San Juan Basin and Iroquois Zone 2 recorded marginal losses of 2-3 cents.

As many traders had anticipated, Wednesday afternoon’s dime-plus uptick in natural gas futures translated into strong cash gains at most points Thursday. However, prices again deteriorated greatly in the capacity-constrained San Juan Basin, which was joined in its softness by Rockies pipes as supplies backed up there, largely unable to get to California and east-of-California markets via El Paso.

As NGI sources had expected, Thursday’s rise of about a dime in natural gas futures proved sufficient to outweigh moderating weather and the usual demand slump of a weekend period, producing moderate price gains at most eastern points Friday. In the West, however, Waha and PG&E-related points were the only ones to join the overall firmness. Most of the West ranged from flat to down about a nickel, although San Juan-Bondad recorded a whopping 36 cent plunge. Scattered eastern points were flat, but the majority rose by about a nickel to 15 cents.

As NGI sources had expected, Thursday’s rise of about a dime in natural gas futures proved sufficient to outweigh moderating weather and the usual demand slump of a weekend period, producing moderate price gains at most eastern points Friday. In the West, however, Waha and PG&E-related points were the only ones to join the overall firmness. Most of the West ranged from flat to down about a nickel, although San Juan-Bondad recorded a whopping 36 cent plunge. Scattered eastern points were flat, but the majority rose by about a nickel to 15 cents.

Following on the heels of Wednesday’s dime advances, natural gas futures continued higher Thursday as nervous buyers re-entered the market to cover short positions. Gains were greatest in the prompt month, November, which advanced 5.1 cents to finish at $2.531. Comparatively, the out-months were less impacted by the buying pressure, as the front end of the market was limited to modest gains, while the back end of the market experienced slight losses. Volume was on the high side with 87,773 contracts estimated to have changed hands.

In a topsy-turvy session that left both bull and bear searching for answers, natural gas futures slipped lower Thursday as traders took profits following Wednesday’s shocking storage news and resultant 37.4-cent advance. At the closing bell yesterday, the September contract was 10.1 cents lower at $3.367.

The swing market maintained an upward track Wednesday, butmomentum slowed with increases of a dime or less at most points.Sources reported little change from Tuesday in October numbers asemphasis began shifting more toward bidweek.