Induced

Despite an attempt in morning trade, November natural gas futures on Monday were unable to retrace the mammoth gains recorded last week. The prompt month settled at $6.725, down only 4.7 cents from Friday’s close.

With nearly all areas outside a strip along the Gulf Coast and parts of the Southwest doing some serious chilling out Tuesday, prices again made big gains. Although the Northwest relaxed a bit from the dollar-plus upticks it had seen Monday, Tuesday’s strength was more solidly based because of significantly larger advances in non-Northeast markets and a lack of weakness in the West.

It was mild, but a rally nonetheless. With a new spate of cold weather approaching the Midwest and Northeast, prices ranged from flat to up about 15 cents Tuesday. Not counting the Southwest basins, the West saw most of the flat to barely higher or lower numbers.

A casual observer of Thursday’s futures market might see March’s 4.5-cent decline and $5.74 settle and assume it was another day of light profit taking following a slightly bearish storage report (150 Bcf withdrawal). However, on closer inspection Thursday’s session was anything but “just another day,” with wild price swings, high volatility and a 30-cent trading range.

After spiking higher on the news that 123 Bcf was pulled from storage during the previous week, natural gas futures snapped back to unchanged as traders tried to get a better read on bullish weather forecasts circulating the market. After trading just above unchanged from Thursday’s close for much of Friday’s session, the February contract was boosted at the closing bell by a round of short-covering. It closed at $5.344, up 9.3 cents for the session, but 7.6 cents below its high for the day.

Bullied by winter weather — both outside their windows and in the latest forecasts — futures traders were quick to react Wednesday morning as they propelled natural gas prices above the $3.00 mark for the first time since November. In dramatic fashion, the January contract not only gapped higher on the open, but also gapped above psychological support at $3.00. However, after posting its $3.02 opening trade, the market fell lower throughout the session as traders looked apprehensively to today’s release of fresh storage data. The prompt month settled with a slim, 1.6-cent advance at $2.911, more than a dime off its high for the session.

In contrast to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and Salomon Smith Barney of a colder-than-normal winter in key eastern consuming regions, WSI Corp.’s end-of-October update to its seasonal forecast for November, December and January predicts warmer-than-normal temperatures in the Northeast, Mid-Atlantic and in the central and southern Plains. WSI, however, said it expects cooler-than-normal temperatures in the Gulf Coast states, Northern Plains, Great Lakes states, and all areas west of the Rocky Mountains.

Monday’s cold weather-induced price rally proved to be short-lived, and few if any traders expect it to be revived anytime soon. Most eastern points fell between a nickel and 15 cents Tuesday, while declines tended to be larger in the Rockies/San Juan and California markets. Due to its frigid New England service area, Algonquin quotes essentially were flat.

After Wednesday’s storage-induced sell-off, natural gas futures were mostly quiet Thursday as many traders elected to stay on the sidelines ahead of the holiday weekend. As a result, prices did not stray very much from where they started. A negative open was erased by modest late-morning advances. At the closing bell the bears won it by a nose, with the May contract closing 0.4 cents lower at $5.381. In observance of Good Friday, there was no Access trading Thursday evening and no trading on Friday. The market will reopen on Sunday at 7 p.m.