Rebounding

Despite rebounding crude values, Tropical Storm Dolly entering the Gulf of Mexico and real heat flooding the Northeastern United States, front-month natural gas futures traded in a tight range on Monday before closing at $10.510, down 6 cents from Friday’s close.

Natural gas futures continued to test lower price levels Wednesday as the August contract recorded a low of $11.113 before rebounding to close at $11.398, still good for a 7.9-cent drop from Tuesday’s close. The market appeared to be quite comfortable with following spiraling crude values lower.

Despite an absence of $5 billion-plus mergers and acquisitions (M&A) in the oil and gas patch, overall deal activity is rebounding on the strength of mid-size deal flow driven largely by onshore resource plays and offshore Gulf of Mexico (GOM) economics, according to analysts at Raymond James & Associates Inc.

May natural gas futures tested lower price levels in Wednesday morning trade before rebounding in a big way during the afternoon. After notching a $9.400 low, the prompt-month contract soared to a $9.950 high before closing out the day at $9.832, up 10.8 cents from Tuesday. May crude also rebounded Wednesday, gaining $3.85 to close at $104.83/bbl.

Prices continued to fall at a slight majority of points Friday, but the Midcontinent joined nearly all of the West in rebounding. Most eastern markets bowed to generally moderate to cool weather and the previous day’s 12.7-cent decline by the new prompt-month November futures contract. A cool Midwest was due to start warming up again over the weekend, which helped explain the Midcontinent gains, but market-area quotes were softer.

As a marketer had predicted a day earlier, a majority of the cash market was able to continue ascending Tuesday — but by considerably smaller amounts (except in the rebounding Rockies) than on Monday. In addition, there were more flat to softer points as cooling trends began to reduce power generation demand in key northern market areas.

Following the Energy Information Administration’s (EIA) 46 Bcf natural gas storage withdrawal report Friday for the week ended Dec. 22, February natural gas immediately plunged to a low of $6.00 before rebounding just a minute later. In thin trading on the day, the prompt month settled early at 1 p.m. EST at $6.299, up 5.1 cents on the day but 51.1 cents lower for the week. January futures expired Wednesday at $5.838.

Rebounding from Monday’s 24.3-cent decline, April natural gas futures on Tuesday climbed as high as $6.750 before settling at $6.678, up 13.1 cents for the day. Despite the bounce, market experts said the level of bearish fundamentals in the market right now would make any sort of significant rally difficult.

In the holiday-shortened trading session on Friday, February natural gas, on limited volume, tested lower first before rebounding in the afternoon. After failing to gain traction to the upside, the prompt month ended up settling nearly unchanged at $11.225, two-tenths of a cent higher on the day, but $1.177 lower for the week. Trading closed at 1 p.m. EST Friday ahead of the New Year’s Day holiday weekend.