Minutes

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.

After carving out a 19-cent range in the first 90 minutes of trading, the natural gas futures market moved quietly sideways Tuesday as traders deliberated over the clash between short-term bearish factors and longer-term (bullish) uncertainty. The June contract closed at $6.056, up 4.1 cents for the session, and more than 15 cents above its morning low at $5.90. At just 57,635, estimated volume Tuesday indicated a quiet futures pit with action led by local traders.

After tumbling through the first 90 minutes of trading, natural gas futures battled back Wednesday afternoon as locals traders had their way with the market for the second session in a row. With only 91,061 contracts changing hands, volume was relatively light considering the yo-yoing price action. In its first back-to-back daily advance since mid-October, the December contract closed at $3.877, up 0.5 cents for the session.

After spending less than 5 minutes below $4.00 last Friday, natural gas futures rebounded convincingly yesterday as traders were once again hit with another bullish weather forecast to start the week. The resultant buying pressed prices higher throughout the trading session. A round of locally-led short-covering put a bow on it for bulls, as the November contract rallied at the close to settle at $4.176 on its penultimate trading day, up 14.8 cents from Friday and just a few ticks off its $4.19 high Monday. Considering it was the day before expiration, trading was light as just 84,638 contracts changed hands.

After carving out an 8.5-cent trading range during the first 50 minutes of trading Tuesday, natural gas futures settled down and chopped lazily sideways for the remainder of the session. The October contract finished at $3.356, down 4.3 cents for the day and just above its $3.34 low. At just 72,545, estimated volume was indicative of a market that is uncertain what forces will impact the natural gas futures market on Sept. 11.

September natural gas futures spiked all the way up to $2.80 from $2.67 in about five minutes Thursday morning after the Energy Information Administration (EIA) reported a 33 Bcf storage injection, which was well below most expectations (centered on 45-50 Bcf). EIA also issued a downward revision for its data from the previous week. Despite the bullish news, however, the September contract managed only an 8.5-cent gain for the day and closed at Tuesday’s high of $2.745, leaving some observers unconvinced that the downtrend is over. October gained 8 cents, ending the day at $2.784 and the winter strip rose 5.7 cents to $3.46.

After shifting higher and lower in the first 30 minutes of trading Wednesday, natural gas futures were nearly unchanged at the close following the announcement that 112 Bcf was pulled from underground storage facilities last week. March settled at $2.385, down 1.2 cents for the day, but still well-within striking distance of its 6-week high notched yesterday at $2.43.

After moving lower in the minutes following the 2 p.m. EST American Gas Association storage report showing a net 16 Bcf withdrawal, natural gas futures rebounded modestly at the close Wednesday, the third day in a row the market has moved higher in the afternoon to rescind a portion of that day’s losses. However, just like on the two previous days, the result was the same — a net loss for the prompt month. January closed at $2.491, up slightly from its $2.45 low for the session, but down 7.2 cents for the day.

After etching out its daily range during the first 40 minutes of trading yesterday, the natural gas futures market moved mostly sideways, as traders played their cards very close to their vests. Not even a rally by its petroleum complex brethren could entice natural gas out of its funk, and as a result the market was left to check sideways for the remainder of the session. At $2.253, the November contract finished unchanged on its first day as prompt contract at Nymex. Meanwhile, the 12-month strip sifted lower 1.1 cents to $2.768.