Moderating

With little to look forward to other than moderating temperatures and another potentially triple-digit storage report to be released Thursday, natural gas futures traders favored the sell-side Tuesday in another quiet, holiday-week trading session. With that, August spent its third day as prompt contract plumbing near two-month lows at $5.24. It closed for the day at $5.317, down 9.4 cents for the session.

In another in a string of volatile trading sessions, natural gas futures climbed higher early in the session Tuesday in sympathy with crude oil and in anticipation of a potentially bullish storage report Thursday, only to be dumped lower in the afternoon as traders realize that winter is starting to release its stranglehold on the market.

What a difference a week can make. Weighed down by forecasts for moderating temperatures and technical selling, the futures market ended the month of January on a negative note, with many traders sensing that the seasonal top was already in place. Cut to Friday, however, and the trading landscape had completely changed. Weather forecasts were calling for another wave of below normal temperatures, crude oil and its related products were testing new highs and natural gas was looking back over its shoulder at the $6.00 mark, believed unobtainable just a week before.

In reaction to forecasts calling for moderating temperatures and in anticipation of Thursday’s release of fresh storage data, natural gas futures slumped Wednesday amid light long liquidation. And although the March contract finished with a 11.8-cent decline for the session to close at $5.644, it remains in an uptrend on the daily chart. Estimated volume was heavy, with an estimated 101,308 contracts changing hands.

While the National Oceanic and Atmospheric Administration (NOAA) continues to see a moderating influence of El Nino producing warmer than normal winter temps across the northern half of the country straight on through March 2003, other forecasters are pointing out that prediction has been wrong so far and will continue to be wrong.

While the National Oceanic and Atmospheric Administration (NOAA) continues to see a moderating influence of El Nino producing warmer than normal winter temps across the northern half of the country straight on through March 2003, other forecasters are pointing out that prediction has been wrong so far and will continue to be wrong.

Except for a few flat to slightly lower Northeast citygates and western points, most of the cash market continued to build on Wednesday’s advance with further large gains Thursday. And sources said that with the dazzling 38-cent spike in futures, it’s a pretty safe bet to expect more strength in cash numbers for the weekend.

Ignoring moderating weather conditions and softer energy futures, the cash market managed generally moderate gains at a majority of points Wednesday, with San Juan and Rockies prices seeing the largest advances. Several flat to slightly lower points were scattered among the price mix.

Extending losses that began last Wednesday afternoon, the December natural gas futures contract sank to new two-month lows Monday, as traders returned from the weekend to learn of bearishly revised weather forecasts. Heavy over-the-counter selling was seen early Monday morning and that translated into a gap lower opening when the regular open-outcry session commenced at 10 a.m. EDT. December never looked back, funneling 19.7 cents lower to close at $3.863.