Slide

Stemming a two-week, $1.25 price slide, natural gas futures rebounded last week amid neutral to bullish fundamental factors and increasing constructive technical clues. After carving out a fresh 19-month prompt month low by trading down to $2.255 earlier in the week, the October contract finished strongly at $2.50 Friday, up 6 cents for the session and just beneath its $2.53 high for the week.

Ending a two-week, $1.17 price slide, natural gas bulls clung to early gains Thursday despite a considerable push lower late in the session. With that the October contract concluded its first day as prompt contract with an unremarkable 0.2-cent gain to finish at $2.395.

The cash market’s slide continued unabated in post-weekend trading, with some points plumbing depths they had not seen in nearly a year and a half. Declines tended to be smallest at Rockies/San Juan and California points because temperatures were getting hotter in the region again, especially in the desert Southwest where highs topped 100 degrees.

At least temporarily, the slide in May swing prices came to an end for much of the cash market Thursday. Rockies/San Juan/Pacific Northwest and non-Malin California numbers remained on the downhill path, but eastern and Southwest basin prices generally ranged from flat to a dime or so higher. Most eastern points, though, were only barely above flat.

At the risk of sounding like a broken record, prices continued to slide Wednesday for pretty much the same reasons that they have through nearly all of the May aftermarket so far: a relative dearth of weather demand for either heating or air conditioning; a weak screen; and a decidedly blasé attitude about any urgency in refilling storage.

Prices emerged from the weekend to resume the slide that dominated much of last week’s market. Only the California border-SoCalGas managed to show a gain for the day as a terribly weak screen, continued lack of fundamental support and expectations of another big storage injection report this week combined to push nearly all points down between 10 and 20 cents Monday.

The general market continued its downslide Wednesday, and traders saw very little chance of a near-term rebound, citing further screen softness, a storage injection report that significantly exceeded all prior expectations, and expectations that the out-of-season blasts of winter hitting much of the U.S. this week are about to go away.

Slightly constructive long-lead weather forecasts and animportant technical signal prompted natural gas futures to arrestdownward momentum yesterday and eke out a narrow gain in a quietsession. Many traders elected to wait on the sidelines for aclearer price picture to develop.

In response to recent mild temperatures and tame storagewithdrawals, natural gas spot prices are expected to fall further,possibly as low as $5.50/MMBtu by the next reported index,according to analysts with UBS Warburg. The level is far below the$7.00 mark the firm predicted in January.