Fundamentals

It was only fitting yesterday that the futures market groundlower amid lack of strong fundamentals. After all, Monday was theconclusion of just the second July in the last 100 years in whichNew York City did not reach 90 degrees Fahrenheit. Even WashingtonD.C., which is known for its mostly intolerable summer heat andhumidity was limited to just one day of 90-plus mercury during themonth.

Fueled by strength in the overnight Access trading session,natural gas prices moved higher Friday morning as traders coveredshort positions acquired during the market’s 30-cent move lowerlast week. However, after peaking at $3.93 in the first hour oftrading, the bears went back to work and were ultimately successfulpushing the market lower on the day. The August contract finishedthe session down 2.6 cents at $3.834 in a session that saw anextremely-light, 48,413 contracts change hands.

It is a trader’s rule of thumb not to go home for a long holidayweekend with a large long or short position because of thepotential for fundamental or political forces to produce a severeprice move when the market reopens. Yesterday’s energy complex wasa textbook example of this rule.

Fundamentals began playing a larger role in a rebounding weekendmarket Friday as several sources expressed relief that thepreviously frenetic screen was beginning to calm down.

Other than moderately cooler weather in the West, traders couldfind little fundamental support for cash prices Wednesday yet stillmanaged to push them higher at most points by small amounts ofabout a nickel or less. Two or three Northeast points were the onlyones exhibiting slight softness.

Fueled by a supportive storage report, natural gas futures addedto gains achieved in Wednesday evening’s Access trading session ina sharp opening bell rally yesterday. Taking out resistance atprior highs of $2.62 and $2.66, the March contract advanced 10.3cents to finish at $2.667

In what may have been a Pyrrhic victory, bears were successfulpushing futures prices lower Wednesday amid reconfirmed reports ofwarm weather expected this weekend and next week. Prices for theMarch contract finished the session down 5.4 cents at $2.564 inwhat several sources called a lackluster trading session.

Despite weaker cash prices, mixed weather forecasts and a loweropen, natural gas futures rumbled higher last Friday as traderscovered shorts in a technical frenzy that could pave the way formore gains this week. The prompt March contract finished up 8.3cents at $2.742 after posting a $2.62 low near the open.

Even with continuing mild weather and an indifferent screen, theEast joined the West in a united front of rising prices Wednesday.Gains were fairly uniform across the board, ranging from about anickel to a dime. CIG, which had been lagging considerably behindother Rockies pipes Tuesday, was playing catch-up Wednesday with anincrease of a little more than a dime after an eastward-moving coldfront blanketed much of the state of Colorado in snow.