Technicals

After opening lower in sympathy with lower cash market prices, natural gas futures rebounded Wednesday in reaction to wide price swings in the nearby crude oil pit. Although they finished well beneath their highs for the session, both natural gas and crude oil futures managed gains on the day. January natural gas finished at $5.278, up 3.8 cents for the session and January crude closed at $30.44, up 34 cents.

With a wide variety of storage estimates and medium-range weather forecasts, natural gas traders turned to technical factors Wednesday morning as they bid prices off recent lows and tested overhead resistance. The January contract managed a 19-cent rebound to $4.365 in just 90 minutes, but resistance in the mid-$4.30s held and prices then retraced lower. January finished at $4.298, up 7.2 cents for the day, but 6.7 cents off its $4.365 high for the session.

Working off oversold conditions, natural gas futures turned higher Tuesday, as locals tried to pick a bottom, and trade and commercial sellers were slow to emerge. The end result was a 9.4 cent gain to $3.872 for the December contract, just a few ticks below its high for the session. Estimated volume was 65,897.

The October natural futures contract plateaued at $3.467 at the end of regular trading Friday, up 13.8 cents from the prior day on a major rebound off a key support level on Thursday at $3.19. Observers pointed to a strengthening in the overall petroleum complex Friday due mainly to Iraq’s rejection of renewed United Nations inspections. In addition, Tropical Storm Hanna in the Gulf of Mexico was forcing some minor production curtailments, and some technical factors were helping to channel futures prices higher.

Stemming a three-day, 42.6-cent price slide, natural gas futures turned modestly higher Friday as traders covered shorts ahead of the holiday weekend. There also was the outside chance that tropical activity in the Atlantic and the Caribbean could present a threat to gas production in the Gulf of Mexico this week. The October contract gained 4.6 cents to close at $3.296. By comparison, the gains in the winter strip were larger, led by the January contract, which climbed 8.6 cents to finish back above the $4.00 mark at $4.029. At 50,980, estimated volume in the holiday-abbreviated session was weak.

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.

For the third Thursday in a row, the natural gas futures market moved dramatically higher following a lower-than-expected storage injection figure. At 10:30 a.m. EDT, the Energy Information Administration reported that 37 Bcf was added to underground storage facilities last week, and by 10:40 a.m. the market was 15 cents higher for the session. From that point forward, natural gas futures battled slowly higher as follow-through buying slightly outmatched profit-taking. At $3.515, September finished up 24.1 cents on the day and just a few ticks below its new, eight-week high at $3.53.

Despite an early dip and a temperature reprieve forecasted by the National Weather Service (NWS), natural gas futures stayed hot Monday, as traders continued to cover shorts following last week’s 14% rally. Saving their best for last, bulls were most active at the close Monday, as they pushed the September contract an additional 4% higher on the day to $3.267, a 11.8-cent gain for the session. Estimated volume was heavy with 105,487 contracts changing hands.

After failing to break to beneath pivotal support etched last Wednesday, natural gas futures rocketed higher Monday as commercial traders greeted the return of hot temperatures, and non-commercial traders rushed to cover shorts. The September contract was the biggest beneficiary of the buying surge, closing 20.4 cents higher at $2.965. Estimated volume across all months was moderate, with an estimated 81,811 contracts changing hands.