Overnight

Natural gas futures staged a rally overnight Sunday and into Monday’s regular session as traders assessed forecasts for more seasonal January weather and a short-term positive technical outlook. After reaching a high of $6.560 on Monday, February natural gas ended up closing at $6.378, up 19.4 cents from Friday’s close.

It looked like an “after-Christmas sale on natural gas,” one analyst observed, as January futures plunged below the psychological $6 level in overnight Globex trading and continued the trend during Wednesday’s open outcry session. In its last day as front month, the contract recorded a low of $5.740 before expiring at $5.838, down 27.5 cents on the day. The February contract shed 19.1 cents to close at $6.142.

After tracking lower in Sunday’s overnight Globex trading session on news that some weather forecasts were calling for moderating temperatures next week, Nymex January natural gas futures maintained the downward price momentum throughout Monday’s regular session. Just two sessions after the prompt month reached a $9.050 high, the very same contract on Monday reached a low of $7.780 before closing at $7.806, down 61.6 cents from Friday’s close.

After trading lower in the overnight Globex session to just under support at $7.180, December natural gas rebounded during Tuesday’s session, recording a high of $7.600 before settling at $7.534, up 11.8 cents on the day.

November natural gas futures made it three consecutive trading days higher Tuesday despite slumping lower in overnight trading Monday. The prompt month started the day trading at its $5.460 low for the session but rebounded in the afternoon to settle at $5.759, up 11.6 cents on the day.

Although a couple of sources were not impressed, a cold front taking overnight lows into the 40s in the Midwest and scheduled to move into the Northeast over the next couple of days appeared to be creating a modicum of heating load that played some role in a strong price rebound at nearly all points Monday. The screen’s increase of nearly a dime on the previous Friday and the return of industrial load from its weekend slump also supported the cash rally.

Maintaining Thursday’s momentum, October natural gas futures punched below the psychological $6 level in overnight trading and remained there through the course of Friday’s holiday-shortened session. The prompt month put in a low of $5.820 during the quiet session before settling the week at 1 p.m. EDT at $5.877, down 17.1 cents on the day and $1.467 lower than the previous Friday’s close. The week also saw the September contract go off of the board at $6.816.

An overnight and early morning surge in near-month natural gas futures prices Friday lost energy around 11:30 a.m., and the market gave up significant ground in the afternoon to end the day up only 7.8 cents at $7.157 after having reached a high of $7.520. Some sources attributed the afternoon sell-off to rumors that the Caribbean tropical depression might weaken. However, by 5 p.m. EDT the National Hurricane Center had already upgraded the depression to Tropical Storm Ernesto.

After gapping higher following the overnight Access trading session, August natural gas futures pushed even higher following the Energy Information Administration’s 10:30 a.m. EDT report that only 59 Bcf was injected into underground storage for the week ended July 14. After reaching a high of $6.230, prompt-month natural gas settled the day at $6.091, up 22.9 cents.