Strength

June futures eased, to the dismay of market bulls who were hoping the contract would exhibit Friday’s strength and trade up to $8.23 Monday, or at least hold the psychologically important $8 technical support. instead, June settled at $7.913, down 3.1 cents, and July followed suit, dropping 4.3 cents to $8.091.

The cash market strength from Tuesday was slipping Wednesday, but a solid majority of points were still on the rise, although their gains were considerably smaller than the day before. Backsliding occurred in the Rockies as a winter storm was scheduled to have departed the area by Thursday.

Following the price strength seen over the first two trading days of the week, most cash market points on Wednesday declined despite the fact that the Northeast, Great Lakes Northern Plains and parts of the Mid-Atlantic and Midcontinent are still shivering under below-normal temperatures. After being one of the largest gainers to begin the week and recording twin $20 highs, Transco Zone 6 New York on Wednesday registered the largest drop, shedding nearly $6 to average just shy of $11.85/MMBtu.

Feeding on recent futures strength and slight cooling trends in northern market areas, prices ranged from flat to about 40 cents higher at a large majority of points Wednesday. Texas Eastern-Kosciusko in the Gulf Coast and Transco Zone 6-New York City were the only contrarian points to see modest losses of up to a nickel.

Triple-digit spikes at Northeast and Chicago citygates topped price increases at most points Friday. The show of strength even reached into the production area as Northern Natural-Ventura and Tennessee’s 500 Leg got in on the act with advances exceeding $2 and $1, respectively. The market reacted to predictions that the coldest weather so far in the heating season will be firmly entrenched in most areas by the beginning of this week.

Futures strength, which had largely been responsible for cash quotes rising most of last week, had its supportive ability fail Friday as the physical market took double-digit dives at all points. Cash traders also had to contend with a weekend warm-up in the Midwest eliminating some heating load at the same time that falling temperatures were reducing cooling load in the western end of the South.

Seemingly unaffected by the significant strength in the petroleum sector, natural gas futures on Monday pushed lower as the tropics remained quiet and temperatures began to moderate in the U.S. After trading below the psychological $7 level in Sunday’s overnight session, September natural gas traded within a slim 21-cent range during Monday’s regular session before settling at $6.907, down 33.9 cents on the day.

Slight strength in the futures market and continued above normal temperatures in the West Tuesday prompted further cash market gains of 10-20 cents at most western market locations. The East, meanwhile, reversed course and advanced 5-15 cents on continued storage injections and some minor heating demand.

Continued strength from the tension-filled petroleum sector combined with warmer than normal temperatures in the southern regions of the U.S. worked to buoy natural gas futures Tuesday as May natural gas finally broke out of its recent $6.65-7.65 trading range. Following a high of $8.10 in afternoon trading, the prompt month went on to settle at $8.008, up 43.1 cents on the day, bringing the week’s two-day total gain to 87.3 cents.