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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (2545)8/2/2000 9:45:19 AM
From: John Pitera  Read Replies (1) of 33421
 
the winter Natural Gas contracts have declined too
precipitously it appears and were only selling for a
premium of 14.5% (dec 2000 NG) relative to June 2001.

I think this is part of the psychology of this bull market
in energy, many nonbelievers in the underlying demand, in
the energy complex.

SSB has been advocating buying Dec 2000 and selling june 2001 and waiting for the spread to expand in dec's favor.

Tuesday August 1, 2000
Summary
Early market OTC and weak cash markets could not contain the NYMEX natural
gas. Prices opened higher than early OTC trades and roared past cash numbers
in the low 3700 range. September natural gas moved higher throughout the
session to settle just shy of the 4000 level. September natural gas ended up
213 ticks at 3987. The 12-month strip was also up strongly to finish at
3871, up 132 ticks.
A combination of factors led to the price rise. The failure to follow OTC
and cash markets lower apparently caught some locals short. As commercial
buying reportedly entered the market, locals were forced to cover their
shorts. Additional commercial buying drove prices to the 3900 level where
fund buying reportedly entered. Also in the mix was another industry storage
report that indicated a build of 55 bcf. Along with the low pressure area in
the Gulf of Mexico and a reported generation outage out West, prices advanced
substantially.
Tomorrow should focus on the AGA report, barring further organization of the
low pressure area in the Gulf. Our expectation for the AGA report is for a
build of between 63 and 73 bcf with a bias toward the lower end of that
range. Market expectations range from a build of 60 to 75 bcf. This
compares to a build last year of only 26 bcf, a 3-year average of 50 bcf and
a 5-year average of 55 bcf. This could actually be the second week of the
injection season to exceed the 3 and 5-year averages. We consider any build
below 70 bcf to be bullish.
Nuclear generation again rose slightly to 91,708 MW, which is 1.6% ahead of
last year and 96% of total capacity.
CLOSING PRICES
NYMEX OPEN HIGH LOW SETTLE CHANGE
September 3775 4030 3775 3987 +213
October 3810 4030 3810 3986 +188
November 3925 4080 3925 4080 +174
December 4040 4180 4040 4180 +160
January 4040 4175 4040 4175 +156
February 3910 4040 3900 4005 +136
12-Month Strip 3871 +132
~
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