Supportive

After failing to successfully probe the downside, natural gas bulls took control Thursday at Nymex following the news that only 80 Bcf was injected into underground storage facilities last week. At 12:45 p.m. EDT the June contract was up 22.5 cents for the session at $5.885. It closed at $5.772, 11.2 cents above Wednesday’s close. With 96,927 contracts changing hands, trading volume was heavy.

Despite overbought conditions and a market that many felt could go no higher, natural gas futures defied gravity yet again Monday, as bulls rebounded strongly from a lackluster morning sell-off. With that the September contract achieved a new three-and-a-half-month high, gaining 13 cents to close at $3.617. Estimated volume was light to moderate at 93,696.

March madness continued at the New York Mercantile Exchange Wednesday after the American Gas Association (AGA) announced that a whopping 140 Bcf was pulled from underground storage facilities last week. Despite coming at the high end of the 110-140 Bcf range of expectations, the withdrawal initiated a selling surge that dropped the April contract to $2.87 just moments following the release of the report. The April contract closed at $2.87, down 14.8 cents for the session and just off its $2.85 low etched just before the close.

In a trading session reminiscent of days long gone, natural gasfutures were somewhat subdued Friday as traders held prices withina tight 16-cent trading range. Armed with fresh weather forecastsas well as a constructive technical outlook, traders added to theirlength, not only in the prompt month, but also in the summercontracts. Being the last month left on the winter of 2001 strip,March continued to play the role as the sacrificial lamb as it waslimited to a modest 5.2-cent advance. Comparatively, theApril-October summer strip showed a little more life, rumbling 7.1cents higher to close at $5.725.

An advocate of stiff pipeline safety laws, Rep. James L.Oberstar (D-MN) said he was “generally supportive” of the recentmove by the Department of Transportation’s Office of PipelineSafety’s (OPS) to toughen the requirements for safety inspectionsof large hazardous liquid pipelines. But he believes PresidentClinton’s decree to the agency to beef up the safety standards forsmall liquid and natural gas pipelines came up short.

Neither the American Gas Association (AGA) storage report of a25 Bcf withdrawal nor a supportive morning futures screen couldlift cash prices yesterday, as most points stayed within a coupleof pennies on either side of flat.

Buoyed by cool weather in the Northeast, bullish techincals andsupportive cash market prices, natural gas futures rumbled higheryesterday as traders bid up prices in an opening bell buyingfrenzy. After gapping higher at the open, the May contract spikedto a new life-of-contract high during the first hour of trading.From that point the buying waned and prices were left to chopsideways for the remainder of the session. May finished up 8 centsat $3.158.

Supportive physical prices and concerns over supply tightnesstook center stage yesterday in the natural gas pit at Nymex andthat gave bulls the impetus to post the seventh straight priceadvance. The September contract finished up 2.7 cents at $2.748after notching both a higher high and a higher low for the session.Estimated volume was 77,940 contracts.

Slowly but surely the faux summer that much of the eastern U.S.has experienced recently is turning into “real summer,” a marketernoted. But even that and a moderate gain by the August Henry Hubfutures contract were not enough to avert softening at most cashtrading points Thursday. Eastern declines tended to be minuscule,with a few points staying flat and few others falling by more than1-2 cents. But an easing of Southwest supply constraints andgenerally cooler weather in the West caused larger price drops inthe West, topped by a loss of several cents in the San Juan Basin.