Rally

The sell-off continued yesterday in the natural gas pit at Nymexas traders continued to take profits following the rally to $4.715last month. After gapping lower for the second day in a row, theAugust contract chopped mostly sideways before finishing at $3.66,down 5.5 cents for the session.

Prices went up by about a dime or more at nearly all pointsWednesday, but sources were in consensus that the brief marketfirmness will not continue today.

The cash market used Friday’s futures advance, along withexpectations of hotter weather this week, as a springboard toachieve across-the-board gains in double digits Monday.

After rebounding 5% during Friday’s short-covering rally, bullsat Nymex cooled their heels yesterday as traders pressured thecontract lower on moderating weather forecasts and a less bullishtechnical outlook. At the close, the prompt August contract was off3.4 cents at $4.228.

The meltdown occurred as expected Thursday in the cash market.Few points escaped with declines of less than 20 cents, with thegreatest losses of around 40 cents at the linepack-saturatedNorthern California points of Malin and the PG&E citygate,where the utility declared a systemwide OFO for today (seeTransportation Notes).

After Wednesday’s 9.8-cent gain following what was construed asa bullish report on gas storage levels, futures rallied yesterdaywith July posting a 20.7-cent gain to a new contract high of$4.463, which was 1.7 cents off its daily high of $4.480.

Fundamentals began playing a larger role in a rebounding weekendmarket Friday as several sources expressed relief that thepreviously frenetic screen was beginning to calm down.

Bolstered by follow-through buying on the heels of Monday’s14.5-cent rally, natural gas prices pressed higher early yesterdayonly to tumble back to near unchanged. At the closing bell, Junefutures were up a scant 1.3 cents at $3.183.

After gapping up an impressive 2.5 cents at the open yesterday,natural gas futures chopped higher throughout the session astraders grappled with the potential of prices climbing even higherthis summer. The May contract reached its $3.15 high for the dayshortly after 2:30 P.M. (EST), only to tumble lower to settle at$3.137 amid a flurry of market-on-close selling. Estimated volumewas light with only 57,253 contracts changing hands.