Range

Weather normalized gas demand this winter has exceeded gas supply by about 750 MMcf/d on average, according to a Monthly Energy Outlook by Stephen Smith Energy Associates. This gas shortage means that gas prices will have to remain at “demand destruction” levels ($4-$7 at the Henry Hub) this summer in order for storage to be refilled to an adequate level by next fall, the consulting firm said.

Weather normalized gas demand this winter has exceeded gas supply by about 750 MMcf/d on average, according to a Monthly Energy Outlook by Stephen Smith Energy Associates. This gas shortage means that gas prices will have to remain at “demand destruction” levels ($4-$7 at the Henry Hub) this summer in order for storage to be refilled to an adequate level by next fall, the consulting firm said.

Shrugging off medium-range forecasts calling for moderating temperatures, natural gas futures shot to new 22-month highs Wednesday as traders bid the market up in sympathy with stronger cash market prices and ahead of bullish storage data due out Thursday morning. Locals sold on the higher opening, but were then quickly forced to cover their sales as the market continued higher. New longs added to the buying frenzy and the prompt month gained 25 cents in 65 minutes to reach a $5.74 high at 11:30 a.m. EDT. February closed at $5.673, up 24 cents for the session.

After bending but not breaking lower at the open, natural gas futures battled back Monday as traders digested updated weather forecasts and storage estimates. The January contract finished at $5.116, down 6.7 cents for the session but up 8.6 cents from its $5.03 low. As expected, estimated volume — at 66,458 — was weak, as many traders elected to remain on the sidelines ahead of the holidays. Nymex energy markets will close at 1 p.m. Tuesday and reopen at 7 p.m. Wednesday with Access trading.

After remaining for more than two months in a range of 350-400 Bcf, the natural gas surplus finally has begun to show signs of yielding to a combination of “relentless” summer heat, a continuing production decline and a positive demand response and “steady trend” toward a higher oil-to-gas price ratio, said an energy analyst Monday. However, the return to “tight gas markets” may not occur until “some point in 2003.”

For the second time in three trading sessions, natural gas futures finished strongly Thursday after tumbling lower on profit-taking pressure earlier in the day. The market sunk lower at the closing bell Wednesday after traders learned there was no correction accompanying this week’s AGA storage report. Prices continued lower at the opening Thursday, fueled by a very bearish gap-lower opening on the daily chart. However, similar to Tuesday the sell-off lacked the intensity some traders expected, and as a result, short-covering entered the market to lift prices higher in the afternoon. April closed at $2.924, up 5.4 cents for the session.

Following the release of some of the most price-constructive medium range weather forecasts thus far this winter, natural gas futures shuffled higher Thursday. Continued short-covering pressure was enough to promote prices to new six-week highs for the third day in a row. However, the buying was done in an orderly manner, and because it was almost evenly matched by local and commercial selling, the day’s gains were limited. The March contract settled at $2.425, up 4 cents for the session. By virtue of yesterday’s 118,144 figure, estimated volume has easily eclipsed the 100,000 mark each day this week.

The November contract managed a $2.30 high and a 6-cent increase for the day Tuesday to $2.268 on a short-term cold weather forecast and a little fund buying. The modest market strength, however, is expected to be short-lived, according to several sources who point to few near-term fundamentals to inspire a significant rebound.

After etching out its daily range during the first 40 minutes of trading yesterday, the natural gas futures market moved mostly sideways, as traders played their cards very close to their vests. Not even a rally by its petroleum complex brethren could entice natural gas out of its funk, and as a result the market was left to check sideways for the remainder of the session. At $2.253, the November contract finished unchanged on its first day as prompt contract at Nymex. Meanwhile, the 12-month strip sifted lower 1.1 cents to $2.768.