Sep. 28-MAR--
[B] NY Natural Gas Review: Plummets amid profit taking, weak cash
By Gelu Sulugiuc, BridgeNews
New York--Sept. 28--NYMEX Nov Henry Hub natural gas futures plummeted
amid profit taking and weak cash prices as a tropical disturbance in the
Caribbean Sea failed to impress traders. Nov ended down 31.7 cents at
$5.130 per MMBtu.
Speculation that upcoming storage injections might diminish the
year-to-year deficit also helped push the market down, traders said.
* * *
Nov lost almost 6% of its value Thursday.
"We've gone up too much," a trader said. "You need a bit of a profit
taking, a bit of a pullback." Rising temperatures reducing heating needs
and weak cash prices also contributed to the slide.
"The sell-off should have happened yesterday," said Guy Gleichmann,
senior trader at FSG International. "Short covering ahead of the Oct
expiration stalled yesterday's attempt at a sell-off."
A tropical disturbance in the northwestern Caribbean Sea is being
closely watched by the U.S. National Hurricane Center Thursday morning for
signs of tropical depression evolution, but market players seemed unfazed.
"It's too early for this (to be a factor)," a trader said. "We've had
two near-misses with decent size disturbances and now people are getting
numb to hurricane hype."
Recently the natural gas market has been following the crude market
more closely, and when crude lost more than $1, gas followed.
"People that got long at higher levels got stopped out," a broker
said. "It just couldn't find any support anywhere."
OUTLOOK:
Traders will look to see if the market can sustain support at the
$5.080 level. "That's a critical number," the broker said. "If we hold
that, we can rally back up. If we break that, you can see $4.840-$4.860."
Some traders seemed to expect the market would pop up in the morning,
as they established new longs at $5.170 during Access trading, up 4.6c
from Thursday's settlement.
Traders and analysts continue to speculate on how much gas will be in
storage at the beginning of November. Many believe injections will stay
firm the next couple of weeks, cutting into the year-to-year storage
deficit.
"If storage falls short of 2,700 bcf (by the onset of winter), that
justifies $5 gas," Gleichmann said. "If it is above 2,700 bcf and we get a
mild winter, we could see a violent correction. At the first sign that
November is mild, I think you could have quite an adjustment of the
price." End
Gloria Gonzalez contributed to this story.
--Nov futures expire Oct. 27, while Nov options expire Oct. 26.
--American Gas Association storage report due out at 1400 ET Wednesday. |
