Mercantile

It was a tale of two markets Friday at the New York MercantileExchange. Softer cash market prices helped push futures priceslower early in the trading session. Those losses, however, werequickly erased in the afternoon as traders weighed the impact offorecasts calling for warming temperatures this week. The Julycontract finished at $2.437, 4 cents higher for the day and 7.9cents for the week.

“Close, but no cigar,” was one trader’s apt description of theprice action yesterday in the natural gas pit at the New YorkMercantile Exchange. A session that saw the prompt month unable tobreak stubborn resistance near $2.40. After an early dip, the Julycontract spent much of the session near its $2.39 high beforeplummeting lower at the close. July finished at $2.343, down 1.5cents.

Cautious selling was met with light, scale-down buying pressureat the New York Mercantile Exchange Friday. And when the dust hadcleared and all the orders counted, both bulls and bears couldglean something positive from the session. Bulls were quick topoint to the $2.225 settlement, a 0.7-cent advance for the day.Bears, on the other hand, touted Friday’s lower high and lower lowas an indication the downtrend was still intact. Estimated volumeof 77,538 confirmed the heavy activity in the pit.

It was business as usual last week at the New York MercantileExchange as the market continued its tug of war, pitting storagebears against bottom-seeking bulls. And just as the case has beensince the middle of 1998 when the downtrend began, it was the bearswho were dominant, pulling optimistic buyers dangerously close tothe mud in the middle. But just when even the most time-weatheredbulls were ready let go of the rope, the market managed to fumblehigher in lethargic Friday afternoon trading. The April contractfinished up 1.2 cents for the day at $1.699.

Electronic trading may be the antidote to anemic trading of theNew York Mercantile Exchange’s Alberta and Permian Basin gasfutures contracts, Exchange President R. Patrick Thompson said lastweek.

Trading at the New York Mercantile Exchange for the month ofFebruary has featured tight but choppy ranges punctuated by smalldecreases when sellers slightly outnumbered the buyers in themarket. And yesterday’s expiration-day session was simply amicrocosm of that as the March contract was the focus of a fierce,and mostly balanced battle, which was ultimately decided by sellerslate in the day. The March contract concluded its reign as promptmonth with a 4.4-cent decline to settle at $1.666.

The Chicago Mercantile Exchange announced Thursday it has filedfor regulatory approval to offer exchange-traded, heating degreeday (HDD) and cooling degree day (CDD) futures and optionscontracts. The CME said these indexes will help companies manageweather-related financial risks. A start date will be set afterCommodity Futures Trading Commission (CFTC) approval.

Natural gas futures trading at the New York Mercantile Exchangestarted the week slightly on the down side Monday, as bearishfundamentals once again set the tone for a weaker trading session.The March Futures contract opened down 4.2 cents from Friday’ssettle, and continued the day trading in a tight 5-cent range toclose down 3.3 cents at $1.744. “As far as fundamentals areconcerned, the outlook looks bearish for this contract,” one tradersaid. “You have extremely mild weather and no support at Nymex and,certainly, storage numbers are still significant.”

Traders put bearish fundamentals aside yesterday at the New YorkMercantile exchange when short-covering and some constructive dailychart features helped the expiring February contract spike higherin active trading. Estimated volume was high, with 134,852contracts changing hands. But despite February’s dramatic 9.6-centadvance to settle at $1.810, many doubt that the market will beable to hold on to those gains when the March contract makes itsdebut today as the prompt month.