Highs

The natural gas futures market is back in an uptrend, and despite mostly bearish fundamental factors, is not having a difficult time finding reasons to move higher. On Friday it was hype over a new hurricane forecast, which helped cap last week’s choppy trading action with an impressive, 18.5-cent advance. On Monday, it was technical short-covering, with bulls charging toward at key upside target at $6.52.

While much of the gas industry is busy preparing for a period of low prices and declining demand due to the weakening economy, Duke Energy is showing great confidence in future gas market growth. The company announced plans late Thursday to buy Westcoast Energy in a cash and stock transaction valued at US$8.5 billion, including $4 billion in debt assumption. The move greatly expands Duke’s North American natural gas pipeline holdings and positions it for a strong role in future gas infrastructure expansions.

After failing to successfully probe the downside, natural gas bulls took control Thursday at Nymex following the news that only 80 Bcf was injected into underground storage facilities last week. At 12:45 p.m. EDT the June contract was up 22.5 cents for the session at $5.885. It closed at $5.772, 11.2 cents above Wednesday’s close. With 96,927 contracts changing hands, trading volume was heavy.

After extending to new five-month highs on news that a whopping 48 Bcf was pulled from storage reserves during the previous week, natural gas futures sifted lower in the late morning and afternoon Thursday on profit-taking ahead of the weekend. At $5.709, May futures finished in the bottom half of its daily trading range, up 3.2 cents for the session but more than a dime off its $5.83 high notched earlier in the day.

Natural gas futures extended to new two-week highs Thursday on the surprising news that 9 Bcf was withdrawn from underground storage facilities last week. Bulls were quick to react to the data, and were responsible for propelling the market 17 cents higher in the five minutes following the 10:30 a.m. EDT release. The market continued to chop higher in the late morning and afternoon in an extremely active session that saw more than 90,000 contracts change hands. May finished at $5.419, up 22.4 cents for the day.

Natural gas futures surged to new 24-month highs for the third straight session Friday as traders bid up prices in a feeding frenzy after the trading floor of Nymex shook for nearly 10 seconds that morning when a barge carrying gasoline exploded in New York Harbor.

Buoyed by the one-two combination of cold weather forecasts and a pipeline rupture in Illinois, natural gas futures ascended rapidly Monday as traders let emotion rule the trading session. After peaking at a new contract high of $5.81, the March contract came within striking distance of the 23-month prompt month high of $5.85 set Jan. 23 by the February contract. March closed at $5.766 Monday, up 16.1 cents for the session.

Shrugging off medium-range forecasts calling for moderating temperatures, natural gas futures shot to new 22-month highs Wednesday as traders bid the market up in sympathy with stronger cash market prices and ahead of bullish storage data due out Thursday morning. Locals sold on the higher opening, but were then quickly forced to cover their sales as the market continued higher. New longs added to the buying frenzy and the prompt month gained 25 cents in 65 minutes to reach a $5.74 high at 11:30 a.m. EDT. February closed at $5.673, up 24 cents for the session.

While discounting current highs as seasonal and political, the Canadian natural gas sector sees the North American market shaping up as strong enough to stimulate a fresh and sustained run at expanding supplies.