After spiking 7% higher Monday on storm hype, natural gasfutures retraced lower yesterday as traders hedged against thepossibility that the storm will miss the Gulf of Mexico entirely.Before tumbling lower, however, the prompt month was able to carveout a fresh all-time prompt month high at $4.85. The Septembercontract finished on the defensive, down 22.7 cents for the sessionat $4.52.
Articles from Highs
There was a strong bull rally in gas futures yesterday. Afterbusting through and settling above the $3 barrier on Wednesday, Maysurged 6.6 cents higher to a new high of $3.087, a couple centsfrom its daily high of $3.105 and a greater distance from its$3.045 low for the day. The summer strip closed up 6.8 cents at anew high of $3.11, and the 12-month strip set a new high at $3.116.
With little in the way of technical or fundamental news, naturalgas futures were held to an extremely-tight, 4-cent range in quiettrade yesterday. By finishing at $2.949, the May contract was just0.1 cents below its opening price and 2.2 cents lower for the day.Estimated volume was thin, with only 31,720 contracts changinghands.
After an early attempt to take out prior highs was rebuffedyesterday, natural gas futures trickled down to easily establish anew low for the week at $2.19. Bears were egged on by a number offactors, which include a rapidly deteriorating technical pictureand expected weekend physical demand fall-off, sources agreed. TheJune contract finished at $2.218, down 3.6 cents for the day.
After three consecutive days marked by the bullish pattern ofhigher highs and higher lows, the futures market receded yesterdayon a wave of selling pressure by both commercial and local traders.June wilted into its daily close, tumbling 8.1 cents lower tofinish at $2.262.
Feeding off momentum gained in both the regular and accesstrading sessions Wednesday, the futures market muscled higheryesterday as the May contract notched its highest price since lastNovember. After gapping higher to open at $2.215, May traded mostlysideways Thursday morning before an early afternoon buying surgemapped out yesterday’s high price at $2.23. The contract finishedjust off that level at $2.225, a 5.1-cent advance on the day.
Perched at recent highs and just below contract resistance at$2.19, the May contract was poised to continue higher yesterday.And after opening at $2.17 local buying pushed prices to $2.189 inchoppy trading. But despite the bullish euphoria the market hadbefore the open, locals received little help from other marketsegments early yesterday and were forced to cover their longpositions Tuesday afternoon. The resultant sell-off left the promptmonth down 2.5 cents to $2.144.
After pushing the futures market lower into the weekend, thebears were at it again early yesterday as they ushered the Maycontract to its lowest level since last Wednesday. But sellingquickly dissipated, leaving the market exposed to unchecked buying.The May contract finished up 4.5 cents at $2.169 after notching a$2.18 high.
Triple-digit temperatures throughout much of California inlandfrom the Pacific Coast spurred record energy demand, promptingstate and utility officials to call for voluntary cutbacks inelectricity usage on the eve of the Labor Day holiday weekend.Collectively, August turned out to be California’s hottest ever,further testing the reliability of the new power system in thestate.As Southern California Edison, San Diego Gas and Electricand the nation’s largest municipal utility, the City of Los AngelesDepartment of Water and Power, all registered record power demandMonday, a corresponding record for natural gas delivered toelectric generating plants was marked at Southern California Gas,which transports supplies to all three electric utilities. Gassupplies for power generation equaled 1.92 Bcf/d on Monday,surpassing a one-day record set Aug. 11, 1994 (1.877 Bcf), and aspokesperson for SoCalGas said with the prediction of more hotweather later in the week, “there is a chance we will surpass thenew record.”
Follow-through buying took hold of Nymex trading early, and ledto new session highs before the closing bell last Friday as Julygained 9.9 cents to settle at $2.17. July gapped higher on the openafter coming into the day with solid momentum following Thursday’smodest gains in both the regular and ACCESS trading session. Julyopened at 2.115 Friday, already 4.4 cents above Thursday’s settle.A warming trend for both the weekend and extending into the 6-10day forecast in the South, coupled with some technical momentumwere universally cited as reasons for the strength.