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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (3787)	7/26/2002 8:00:29 PM
From: Ron Everest	Read Replies (1) \| Respond to of 11633

futuresource.com DJ. Nymex Aug Natural Gas Futures End Up; Locals Covering HOUSTON (Dow Jones)--The New York Mercantile Exchange August natural gas contract Friday, left with light short covering on the close by locals, settled at $2.936 per million British thermal units, up 3.4 cents. With August expiration on Monday and a weekend in the midst of hurricane season, nobody wanted to go into the weekend short, said Kyle Cooper of Salomon Smith Barney of Houston. "The tropics are obviously on somebody's mind." Also later Friday, the Commodity Futures Trading Commission Commitments of Traders Report showed non-commercial speculators increased short positions last week. On Monday, expect to open lower ahead of expiration, "unless something happens," Cooper said. That something: Maybe how cash prices - and spot demand - fare Monday, said Ed Kennedy of Pioneer Futures Inc. in Miami. Even with Friday's small push upward, the August contract price has fallen 25% since mid-May, when the contract stood at $3.95/MMBtu. Options played little role in Friday's trading, with most open interest hovering around $3/MMBtu and below settlement in the $2.80s/MMBtu. That trapped the market in the middle. Since July 3, the August contract has only settled above that $3/MMBtu level once. The market remains rudderless, said Kennedy. Despite a fall into the high $2.80s/MMBtu, the contract traded in a 7-cents range. Physical gas finished around $2.95/MMBtu Friday, only slightly above the August contract. On Friday, September rose 0.3 cent to $2.891/MMBtu. January rose 1.8 cents to $3.668/MMBtu. The August-January 2003 spread at around 74 cents. The 12-month strip ended at $3.375/MMBtu, up 0.4 cent. With September at a discount to the expiring August contract, marketers may not be buying September and October with storage at such massive levels, said one Texas trader. In the meantime, said Cooper, until lower injections into gas storage come about, rallies are better sells than buys. Recent gas injection rates imply storage will exceed normal storage levels of roughly 3.0 trillion cubic feet by the end of October, said Thomas Driscoll of Lehman Brothers in New York. For next week, early predictions call a build for around 60 billion-65 billion cubic feet. Last year, the EIA reported a build of 68 Bcf; the three-year average is 55 Bcf; the five-year was 56 Bcf. Concerns about future supply may lead storage operators to run at higher inventory levels than historic averages, but Driscoll feels they will be unable to store more than a maximum of 3.2-3.3 Tcf. Recent EIA figures indicate a maximum gas storage capacity of as much as 4.0 Tcf as base gas is relegated to working gas along with recent expansions of storage facilities in the U.S. If storage does reach 3.2 Tcf by Nov. 1, prices need to fall enough for producers to recapture the 175-275 Bcf of demand lost in the past several months, Driscoll said. The EIA has reported 2002 net storage draws of 11.6 Bcf/d, about 0.6 Bcf/d stronger than those reported by the American Gas Association. For the past four weeks, storage injections have averaged 9.6 Bcf/d compared with a five-year average of 10.9 Bcf/d, Driscoll said. Injection rates have slowed modestly during the past several weeks, he said. Physical gas at the benchmark Henry Hub traded at $2.92-$2.97/MMBtu, up 4 cents on the bid, down 14 cents on the offer. July Henry Hub gas ended the morning session around $2.95/MMBtu. Index is $3.26/MMBtu for July. Estimated volume was around 140,000 contracts, about one-half being spreads. Volume on Thursday was 179,652. Also, crude futures fell 23 cents to $26.54/barrel on an industry report showing rising OPEC supply and quota busting by members. -By John Edmiston, Dow Jones Newswires; 713-547-9209; john.edmiston@dowjones.com (END) Dow Jones Newswires 26-07-02 1953GMT DJ info: 28072 N/DJCS,N/DJWI,N/DJOS,N/DRV,N/LNG,N/MKT FSN1912 CEOT COMMENTS ENERGY 2002-07-26 19:53:17 UTC ^^^^^