Traders

Fueled by the fundamental one-two of bullish storage and weathernews, the natural gas futures market rose Thursday as tradersunloaded shorts and added to longs. After dropping a dime lowerWednesday, the January contract opened higher at $2.53 Thursday andnever looked back as prices climbed into the mid-$2.60s. The promptmonth finished near its daily highs, up 15 cents to $2.636.

Traders hoping for unsubscribed El Paso capacity to reduceprices at the Southern California Border will be sorelydisappointed because of last week’s announcement that an unnamedshipper signed for 1.2 Bcf/d. The southwestern pipeline said itrecontracted all of its available firm capacity for a minimum of$37.5 million in revenues for 2000. The amount reflects an increaseof 7% over the annual average revenues generated from the Dynegydeal over the past two years. Dynegy paid $70 million for 1.3Bcf/d.

While yesterday’s price weakness did not surprise many traders,the size of some of the declines exceeded expectations. Near recordhigh temperatures caused major drops in the Midcontinent, andforecasts of hot weather combined with a dropping futures screen toweaken the Northeast, Gulf Coast and western markets.

Natural gas futures sifted lower Monday following news ofwarming East Coast temperatures and amid a weakening technicalpicture. After a disappointing sub-$3.00 opening, the Novembercontract chopped sideways Monday to settle at $3.016, off 5.6-centsfor the session. Volume was somewhat thin as only 63,328 contractschanged hands.

Some traders were getting a sense of deja vu all over again(thanks, Yogi Berra) as a second straight week started withdouble-digit price increases nearly across the board. The biggestgains on either side of 20 cents were concentrated at Northeastcitygates. Despite forecasts of snow and cold weather in theRockies, several increases of about a dime were experienced bypipes there. And although its rise of a little over a dime wasamong the day’s smaller ones, the PG&E citygate topped all U.S.pricing with quotes solidly in the $3.30s.

For the third morning in a row natural gas futures gapped higherat the open before continuing upward as traders covered shortpositions in anticipation of Tropical Storm Bret becoming the firsthurricane in the 1999 Atlantic season. But after notching a $3.015high shortly after noon, the September contract was hit with a waveof profit-taking that delivered the spot month back down to settleat $2.938. Estimated volume was healthy, with 99,927 contractschanging hands.

Traders resurrected a phrase they hadn’t been using very muchlately: “following the screen.” Like a rising tide that lifts allboats, the Henry Hub futures contract for September turned in astrong performance Wednesday and spurred moderate firmness in cashnumbers. In the absence of substantial change in marketfundamentals, there was little besides the Nymex pit for cashguidance, a marketer said.

For bull traders yesterday’s natural gas futures session was acase of “no news is bad news” as prices chopped lower in a raresub-50,000 volume session. As usually is the case the promptmonth-September-took the biggest hit, slipping 4.5 cents to finishat an even $2.70.

After a volatile three days of seller-dominated trading Tuesday,Wednesday and Thursday last week, the futures market was quietFriday as light pre-weekend short covering was almost perfectlymatched by follow-through selling. The August contract could manageonly a 4.5-cent trading range before finishing 0.1 cents higher forthe day at $2.163. Estimated volume was relatively modest, with55,158 contracts changing hands.