Rallying

After rallying nearly 30 cents on Thursday following word of a 78 Bcf storage injection for the week ending July 9, August natural gas futures finished the week on a weaker note Friday as the contract closed the regular session at $4.519, down 6.7 cents from Thursday’s close but 11.7 cents higher than the previous week’s finish.

As expected, exceptional support from a prior-day 80.3-cent futures spike allowed the February cash aftermarket to get off to a strong start by rallying at most points Wednesday. The show of firmness got an extra boost from icy precipitation moving into much of the Southeast Thursday, adding to already existing cold-weather demand.

Tuesday’s late expiration-day spike of September futures had limited success in rallying the cash market Thursday. It struggled against the negative influences of generally moderate late-August weather throughout the northern U.S. and Canada, the lack of any new tropical storm activity and the prospects that Tropical Depression Ernesto will be dampening potential power generation load along the East Coast.

March natural gas broke its streak of eight consecutive regular sessions lower on Thursday, testing the $7 level again before rallying higher to close at $7.134, up 6.8 cents on the day. The Energy Information Administration (EIA) reported Thursday that 102 Bcf was withdrawn from underground stores for the week ended Feb. 10. The number, which was closer to historical analogs than other recent weekly withdrawals, was still short of the industry’s expectations.

Just when you thought you could forget about Washington, DC for a while, the resources industry’s political representatives are rallying the troops for successive rounds in the public arena involving, among other things, putting holes in the offshore drilling moratorium, ensuring funding and implementation of oil and gas programs in the Energy Policy Act of 2005, and reforming two 30-year-old laws, the Endangered Species Act and the National Environmental Policy Act (NEPA).

After rallying Thursday on the coattails of a strong crude futures push, August natural gas futures continued their symbiotic relationship with liquids on Friday, following crude lower on the day.

After rallying Wednesday because some areas would be turning colder by the weekend, prices seemed to be having second thoughts about the situation Thursday. The result was a cash market resembling the ones that ended last week and began this week: a mixture of moderately higher and lower numbers that was dominated by declines.

After first rallying on the news that a whopping 100 Bcf had been injected into underground storage facilities last week, the natural gas futures market suffered a slow grind lower Thursday as traders lightened their longs ahead of Friday’s expiration. At $4.542, the October contract finished 4.6 cents lower in its penultimate trading session. It goes off the board Friday at 2:30 p.m. EDT.

If you don’t like the direction of natural gas prices, wait a day. Just one trading session and 24 hours after rallying to a new two-week high at $6.12, natural gas futures tested the other end of the price spectrum Tuesday as sellers took profits and initiated fresh shorts. With no fresh technical news to divert their attention, traders were left to contemplate the possibility for another hefty storage injection when the Energy Information Administration releases that data Thursday. That, coupled with private weather forecasts, which call for temperatures to cool down just as quickly as they have warmed up this week, put bears back at the market’s helm Tuesday.