Scared

While the development of Tropical Storm Katrina scared natural gas futures on Wednesday above $10 on concerns over Gulf of Mexico production, one weather forecasting company warned that the industry might be getting a little ahead of itself.

Scared off by the $6 psychological mark yet again, the natural gas futures prompt month tucked tail Friday as the June contract notched its second consecutive down day. After penetrating the $6 level in trading Wednesday, the June contract followed up its Thursday drop of 4.2 cents with a 6.2-cent loss on Friday to close at $5.862. The prompt month traded in the $5.850-5.970 range on light volume, with 48,826 contracts changing hands.

Wednesday’s last-day plunge in June futures had cash sellersrunning scared, sources said. However, basis differentials did notappear to be changing much if any, a Gulf Coast producer said, sobidweek deals done prior to Wednesday afternoon will tend to beanywhere from 6 to 10 cents above the current market. He was makingsales Wednesday at $2.00-02 for Henry Hub and $1.99-2.00 forColumbia Gulf-onshore.