Retrace

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 testing the $6 resistance level on Monday, May natural gas futures raised the white flag early on Tuesday, retreating 22.1 cents to close at $5.788 on heavy volume, with 92,904 contracts changing hands.

In concert with a one-two combination of bullish private and governmental weather forecasts, the natural gas futures market spiked briefly above the $7.50 mark Wednesday as non-commercial fund traders reversed to the long side of the market. As it turned out, that may have been an expensive decision because prices tumbled Wednesday afternoon nearly as quickly as they had risen.

After spiking 7% higher Monday on storm hype, natural gasfutures retraced lower yesterday as traders hedged against thepossibility that the storm will miss the Gulf of Mexico entirely.Before tumbling lower, however, the prompt month was able to carveout a fresh all-time prompt month high at $4.85. The Septembercontract finished on the defensive, down 22.7 cents for the sessionat $4.52.

Taking a cue from Wednesday’s Access trading session, thefutures market probed lower yesterday as weak longs and speculatorstook profits away from the price rally earlier this week. TheNovember contract was dealt the largest blow, slipping 13.6 centsto finish at $2.834. December closely followed by tumbling 10.8cents to $3.051.

As several observers expected, cash prices started to retracetheir steps back down Thursday after having peaked the day before.Declines ranged from as little as a nickel to nearly 15 cents, butmost were in the neighborhood of a dime.

The futures market came under heavy selling pressure earlyThursday, adding to losses that began in the Wednesday eveningAccess session. However, the October contract was unable to broachsupport at $2.075, and buying enabled the prompt month to recoverslightly in the afternoon. October ended the day down 10.3 cents at$2.138.

The July futures contract was nudged lower again yesterday butnot before bulls attempted to push the market higher early in thetrading session. July reached a high of $2.03 just before 1:00 P.M.EST. only to be beaten back to settle at $1.938, down 3.8 cents forthe day. By dipping into the low $1.90s the spot contract traded atits lowest point since April 1997.