DJ US GAS: Nymex Futures Rally On Contract Expiry
By Jeanine Prezioso
Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--Natural gas futures took a roller-coaster ride Tuesday
as traders closed out short positions on the last day of the September
contract, sending prices higher.
September natural gas futures on the New York Mercantile Exchange settled
34.4 cents higher Tuesday at $6.816 per million British thermal units.
Front-month futures fluctuated 87 cents throughout the day, from a low of
$6.08/MMBtu to a high of $6.95/MMBtu.
Gas futures rallied Tuesday after a 10% drop-off Monday following news that
Tropical Storm Ernesto was headed east towards Florida, avoiding the Gulf of
Mexico energy complex.
Traders and analysts generally expect volatility on a day when the futures
contract expires, since traders need to close out their positions or take
delivery of physical gas.
"Obviously, the buyers were more aggressive than the sellers," said Kyle
Cooper, director of research with IAF Advisors in Houston. "They can't hold
onto the September contract tomorrow, so they had to get out or take delivery
of gas."
With no fundamental changes driving the market, the rally was prompted by
short-covering, Cooper said.
The October gas futures contract becomes the front-month contract Wednesday
and expires Sept. 27.
January and February futures contracts lost 62 cents Tuesday, but maintained
their respective $10 and $11 highs on continued hurricane jitters, as well as
worries about a frigid winter and gas supply crunch ahead.
Two tropical waves with associated strong thunderstorms were being tracked in
the Atlantic, the National Hurricane Center reported Tuesday.
The tropical disturbances are giving traders an added reason to drive up
prices, said George Hopley, a gas analyst with Barclays Capital in New York.
He added that prices for winter-month gas futures are high, in part, because
gas competes with heating oil and other fuels for winter heating, and prices
for those commodities are high. Although crude oil futures settled lower on
Tuesday at $69.71 a barrel, prices for oil and related products are still
considered to be generally high, Hopley said.
Nymex September heating oil futures settled 2 cents down Tuesday at $1.94 per
gallon.
FUTURES SETTLEMENT NET CHANGE
Nymex Sep $6.816 +34.4
Nymex Oct $6.876 +6.4
Nymex Nov $8.800 -19.2
CASH HUB RANGE PREVIOUS DAY
Henry Hub $6.16-$6.33 $6.45-$6.59
Transco 65 $6.40-$6.60 $6.50-$6.75
Tex East M3 $6.77-$6.94 $6.95-$7.20
Transco Z6 $6.81-$6.95 $6.90-$7.10
SoCal $5.89-$5.98 $6.08-$6.16
El Paso Perm $5.65-$5.78 $5.87-$6.02
El Paso SJ $5.58-$5.67 $5.76-$5.88
Waha $5.68-$5.80 $5.96-$6.10
Katy $6.00-$6.12 $6.27-$6.45
Source: Cash market prices from the InterContinental Exchange.
-By Jeanine Prezioso; Dow Jones Newswires; 713-547-9209;
jeanine.prezioso@dowjones.com
(END) Dow Jones Newswires
08-29-06 1728ET
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That $2 spread between Oct & Nov futures really is amazing. If I had an account at a commodities broker I would be shorting that spread too, just like that sangarca guy. October would have to be immensely colder than normal, combined with very cold November forecasts, for that spread to end up larger than it is now. |
