String

Despite constructive gains in both the cash market and crude oilfutures market and following a string of gains in seven of the lasteight trading sessions, natural gas futures gave back a nickelyesterday as traders weighed in on the extremely technicaloverbought condition that existed in the market. And althoughTuesday’s modest retreat did little to satisfy those overboughtconditions, analysts question how much further the market will fallbefore buyers step back in.

In the latest of a string of bullish reports for the gasindustry, the Energy Information Administration’s (EIA)recently-published Short-Term Energy Outlook projected prices inthe coming months to be 25% to 30% higher than last winter. It alsosaid that demand, which the EIA said rose by less than 1% in 1999compared to 1998, is poised to grow 4.6% in 2000. The demand jump,which puts the consumption level at 22.4 Tcf, represents anincrease of 1 Tcf over 1999’s consumption levels.

In the latest of a string of bullish reports for the gasindustry, the Energy Information Administration’s (EIA) Short-TermEnergy Outlook projected prices in the coming months to be 25% to30% higher than last winter. It also said that demand, which theEIA said rose by less than 1% in 1999 compared to 1998, is poisedto grow 4.6% in 2000. The demand jump, which puts the consumptionlevel at 22.4 Tcf, represents an increase of 1 Tcf over 1999’sconsumption levels.

After a string of high-inventory OFOs this summer, usually onweekends but occasionally on a weekday, Pacific Gas & Electriccame up with a new wrinkle Tuesday: a low-inventory OFO takingeffect today with a 3% tolerance for negative daily imbalances. Theutility projected that its linepack would remain below targetlevels through Friday.

The stage was set for expiration day pyrotechnics Monday at theNew York Mercantile Exchange. Bulls were confident they could addto the string of five higher highs and higher lows notched on thedaily charts last week. On the other hand, bears believed theconfluence of mild temperatures and follow-through on the heels ofFridays price erosion would set the tone early yesterday. They wereboth wrong. Except for a late and almost inconsequential bliphigher, the July contract was a model of stability yesterday, wherebuying and selling matched up nearly perfectly. July closed out itstenure as spot month up a meager 0.4 cents to settle at $2.262. TheAugust contract finished up 3.2 at $2.324.

The futures market was poised to trade higher yesterday onmomentum gained from a string of advances dating back to lastThursday, but revised forecasts calling for seasonable temperaturesand a lack of technical direction took the wind out of bull-tradersails, allowing the market to slip lower. For the second day in arow, changes were more pronounced in the December contract than theprompt month. November slid 2.2 cents lower to settle at $2.18, butDecember lost 2.8 cents to $2.455.