DJ. Nymex Dec Natural Gas Futures End Up On Cold Forecasts
By John Edmiston
OF DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--The New York Mercantile Exchange December natural gas
contract Tuesday finished in the $4.70s per million British thermal units,
spinning upward on the potential of bullish fundamentals that have yet to hit
home.
Inconsistent weather forecasts, still showing a hint of winter by the
weekend; another relatively large storage build Thursday; weak next-day
physical gas pricing and slight concern about a possible resurgence of a
tropical storm in the Eastern Gulf of Mexico all rattled the market inside a
$4.585-$4.79/MMBtu range.
"You've got a tale of two seasons," said one trader.
With the shoulder period running into November, "you're seeing few signs of
winter."
A two-day cold front won't mean much, he said, but a five to seven day cold
front "with another right behind it, then you might have a winter."
"It's obvious the cold is coming in," said ABN Amro's Gerry Saccente in New
York.
In the meantime, in the market area of the Northeast, traders pointed to flow
restrictions on some pipelines heavy with winter gas. Selling that gas would
knock next-day pricing even more, a trader said.
"You saw a little bit of everything with the continued consolidation," said
Ed Kennedy of Commercial Brokerage Corp. Good support levels were seen at
$4.64-$4.65/MMBtu with scale-down selling there before locals bought it upward,
he said.
"I can't call it a bottom, although it's impressive support," Kennedy said.
To complete a bottom for the market, he said, he needs to see a close "over
$5/MMBtu - a long way from here."
The uncertainty over weather to come has people on the sidelines, he said.
Looking ahead to Thursday's Energy Information Administration gas storage
report, traders expect to see another build of about 42 billion cubic feet up
to 55 bcf to add to the 3.121 trillion cubic feet already in storage for the
winter.
That compares with a pull of 27 bcf a year ago, a build of 20 bcf in 2001, a
three-year average build of 10 bcf and a five-year average build of 20 bcf,
said Kyle Cooper of Citigroup Inc. in Houston.
A build of only 24 bcf would eliminate the storage deficit from a year ago,
and a build of 31 bcf would lift inventories to 2001 levels. Cooper said. Gas
prices in 2001 were $3.25/MMBtu at the end of October and in the mid-to-upper
$2/MMBtu range by the middle of November 2001.
Also, markets on Wednesday might react somewhat to crude and gasoline
inventories, but "most expect to sit and wait for Thursday's report," said
Cooper.
On Tuesday, December settled at $4.727/MMBtu, up 2.2 cents. January finished
at $4.977/MMBtu, down 0.6 cent. The 12-month average price finished around
$4.729/MMBtu, up 0.7 cent. Nymex December crude futures settled at
$28.75/barrel, down 15 cents.
Physical gas at the benchmark Henry Hub finished the morning session in a
$3.86-$4.15/MMBtu range. First-of-month November index was set at $4.45/MMBtu
by Platts Inside Ferc.
-By John Edmiston, Dow Jones Newswires; 713-547-9209;
john.edmiston@dowjones.com |
