futures

The bears didn’t waste much time Tuesday evening. Minutes after Claudette was downgraded to a tropical storm, traders took the bull by the horns and were able to steer prices in overnight Access trading below key technical and psychological support at $5.00. When the regular, open-outcry session opened Wednesday morning, there was little question which direction prices were headed.

In a textbook display of just how large an impact the weekly Energy Information Administration (EIA) gas inventory report can have on the market, natural gas prices plummeted Thursday moments after the EIA said that a hefty 111 Bcf was added to underground storage facilities last week. After a quick dip lower at 10:30 a.m. EDT, sellers took a moment to catch their breath, but bulls could not muster much of a rally. Bears made use of their second wind to punish prices lower again Thursday afternoon. The August contract finished at $5.258, down 26.2 cents for the session.

Natural gas futures dropped to new one-month lows Thursday morning on the news that a record-setting 125 Bcf was injected into underground storage last week. After gapping lower at the opening bell, the July contract shuffled down for the first 30 minutes of trading. When the Energy Information Administration released its weekly storage update at 10:30 a.m. EDT, the market easily dropped below $6.00. Buyers stepped in when prices reached the low $5.80s, but that did little to dissuade the sellers Thursday afternoon who were successful in pushing the market lower just before the closing bell. July finished at $5.606, down 60.7 cents or nearly 10% for the session.

Weighed down by the day-earlier futures loss of nearly 20 cents and with only marginal prospects for further gains in fundamental demand, most of the cash market recorded drops ranging from about a nickel to 20 cents Tuesday. Western points were a bit stronger than the overall market, seeing modest rebounds in the Pacific Northwest and Western Canada and flat to barely lower numbers elsewhere.

For the second week in a row, natural gas futures shrugged off an undeniably bearish storage report. After dipping to $6.25 in the moments following the report of a record-setting 114 Bcf weekly storage injection, the July contract rebounded Thursday afternoon amid waves of short covering and speculative buying. The contract notched its highest close ever at $6.521, up 14.6 cents for the session and within striking distance of Wednesday’s $6.61 top.

Although the official start of summer is still more than two weeks away, the amusement park season officially opened at Nymex Wednesday. In a roller coaster-like session, the July contract twice soared and descended as fund and local trader technical buying met with equal parts producer selling.

After gapping lower for the second session in a row and reaching a new two-week low, natural gas futures rebounded at the close Wednesday amid a wave of expiration-day short-covering. The June contract initially dipped into the $5.70s early Wednesday, but a short-covering rally ended up boosting the contract to a final settlement of $5.945, up 4.5 cents for the session and 74.5 cents above where June began its tenure as prompt contract a month ago. Comparatively, May 2003 closed 82.2 cents lower at $5.123.

The depressed basis spread between the Rocky Mountain region and Nymex gas futures improved significantly with the addition of the 900 MMcf/d Kern River pipeline expansion, but spreads could begin to widen once again unless additional proposed pipelines are built, according to speakers at GasMart/Power in New Orleans last Tuesday.

After spiking 43 cents on frenzied buying Monday, natural gas futures sifted lower Tuesday as traders took profits on bearish weather forecasts as well as expectations calling for a large storage injection to be announced later this week.