Stout

January natural gas futures made another stout gain Tuesday as traders bought contracts in anticipation of continued cold weather.

Extreme cold in the East finally translated into a stout natural gas storage withdrawal report, but it appears some traders were expecting an even larger number as near-month natural gas futures fell following the 10:30 a.m. EST report Friday. The February contract put in a new low for this downtrend on Friday before closing at $4.518, down 16.3 cents from Thursday’s finish and 28.3 cents lower than the previous week’s close.

December natural gas futures staged a stout advance as near-term weather expectations provided a healthy incentive for buyers. The National Weather Service in its six- to 10-day forecast showed a broad stretch of the country from Louisiana to Vermont and as far west as Kentucky as having to endure below-normal temperatures. From Chicago to Dallas all the way to the West Coast was forecast to be above normal. December futures rose 22.1 cents to $6.533, and January rose 17.3 cents to $6.641. December crude oil slipped $2.09 to $54.95.

The natural gas industry was dealt another stout storage injection Thursday morning, but this time traders were ready. Following the report that 90 Bcf was injected into underground storage for the week ended Aug. 29, October natural gas futures bobbed lower to test support at $7 again before rallying to close at $7.322, up 5.8 cents from Wednesday’s close.

The natural gas industry received news Thursday morning of a stout 105 Bcf build in storage inventories for the week ended May 30. However, despite the significant injection, July natural gas futures bulls refused to take a breather as the prompt-month contract recorded a regular session high of $12.539 before closing out the day at $12.519, up 14 cents from Wednesday’s finish.

Building on the downward momentum created Thursday with a stout natural gas storage injection and flying in the face of surging crude prices, June natural gas futures on Friday threatened to break below $11 as the contract plunged lower. The prompt-month contract recorded a low of $11.080 before inching higher to close at $11.094, down 30.5 cents from Thursday and 44.3 cents lower than the previous week’s finish.

September natural gas futures rose a stout 11.8 cents to settle at $6.208 as traders touted the still hefty discount of natural gas to the petroleum complex and the idea that weather-driven higher prices would ultimately occur.

September natural gas futures staged a stout 29.1-cent advance Monday to settle at $6.499, and for the moment all concern of bin-busting inventories and low demand have been put on the back burner. The latest government figures show that funds and managed accounts increased their short holdings by more than 20%, thus adding to the overwhelming short holdings (and number of ultimate buyers) of speculative accounts.