Rally

The big, sustained rally in 2010 U.S. natural gas prices predicted by some on Wall Street likely will fizzle as soon as the uncompleted wells and shut-in supply flood back into the market, energy analysts said Monday.

As expected, the post-holiday rally in cash prices was unable to sustain itself any longer in the face of receding weather-based demand and weakening futures support. Quotes fell at a large majority of points Thursday, although generally by small amounts. A few flat to a little less than a nickel higher locations resulted in mixed price movement overall.

Despite strong Wednesday morning trade, which made it seem that the natural gas futures rally would last a third consecutive session, the October contract hit its peak just before noon before trailing lower for the remainder of the regular session, closing at $2.829, up 2.2 cents on the day.

Natural gas bulls shouldn’t pin their hopes on a hurricane-inspired rally given the abundance of gas in storage and the diminished relevance of offshore natural gas supplies to the North American market, an analyst said Thursday.

Despite predictions of moderate declines of cooling loads in parts of the South, Midwest and Midcontinent, the previous day’s rally of 16.6 cents by August futures combined with remaining heat-related gas demand to lift cash prices at all points Wednesday.

A marketer had perceived Monday that the growing abundance of major cooling load, especially in the central and southwestern U.S., would not be able to sustain that day’s rally at a majority of cash points because it was accompanied by a screen drop of just under a dime. He was proven correct as softness prevailed in most of the physical market Tuesday.

Drilling activity in Texas declined steadily through April, reflecting “very weak natural gas markets and defying a crude price rally,” according to the Texas Petro Index (TPI), which was issued on Friday. Employment in the state’s exploration and production (E&P) industry has dropped to its lowest level since January 2008.

Drilling activity in Texas declined steadily through April, reflecting “very weak natural gas markets and defying a crude price rally,” according to the Texas Petro Index (TPI), which was issued on Friday. Employment in the state’s exploration and production (E&P) industry has dropped to its lowest level since January 2008.

With support from the rally late last week in natural gas futures prices, a vast majority of cash market points on Monday followed suit, gaining a few pennies to as much as 30 cents. Sizzling record-setting temperatures in the West led to some of the largest gains, but air-conditioning load wasn’t yet playing much of a role according to traders.