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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (4348)	5/8/2001 6:25:21 PM
From: jim_p	Respond to of 23153

HOUSTON (Dow Jones)--Measured short-covering spurts, limited by eager sellers, pushed the New York Mercantile Exchange's June natural gas futures contract Tuesday to settle at $4.279 a million British thermal units, up 4.0 cents. "It was an anemic rally at best," said Ed Kennedy of Pioneer Futures Inc. in Miami. Traders saw light fund buying Tuesday, helped along by locals and commercial marketers. "This isn't bedrock support," Kennedy said. "It's short covering." Expect the contract to consolidate Wednesday in a similar range ahead of the American Gas Association's storage report in the afternoon. Early predictions are for a build of 100 billion cubic feet to 110 Bcf. The five-year average for the week is a build of 72 Bcf; the three-year average is a build of 77 Bcf. A year ago, 58 Bcf was added to storage. "It will be the calm before the storm," Kennedy said, as the market awaits the AGA report Wednesday. A much-smaller-than-perceived build - around 80 Bcf - could push the market upward, he said. Tuesday, locals and commercial trading houses weren't able to push the market downward when physical gas prices refused to follow Monday's late selldown, Kennedy said. That brought the short-covering spurts. "People were either riding the market short or on the sidelines," another trader said. The bottom line, a Houston trader said, is when summer heat reenters the market. Until the market feels the need for load, "rallies are going to be short-lived," he said. The market is technically oversold since the consolidation period in March-April when the front-month contract traded about $5.50/MMBtu, traders said. That's a 23% retracement from the $5.516/MMBtu settlement in mid-April when, traders cautioned, the fundamentals were nearly identical to now. 'I wouldn't try to pick a bottom in this market until Wednesday," said Gerry Saccente of ABN AMRO in New York. "It could get a lot uglier first before we see some sort of rally." July settled at $4.353/MMBtu, up 3.9 cents. June-January 2002 contracts are in contango, with each successive contract slightly more expensive. There's a 64.3-cents spread between June-January 2002, allowing plenty of cash incentive to send gas into storage. At the benchmark Henry Hub in south Louisiana, physical gas deals for May traded around $4.20-$4.26/MMBtu, down 8 cents. -By John Edmiston, Dow Jones Newswires, 713-547-9209; john.edmiston@dowjones.com (END) Dow Jones Newswires 08-05-01