Dow Jones Report:
16 Feb 2007 15:27 EST
DJ US GAS: Gas Rises, At Center Of Range, Waits On Weather
By Jeanine Prezioso Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--Natural gas futures closed higher Friday boosted by a short covering rally ahead of a long weekend, and to guard traders against conflicting weather forecasts.
Natural gas for March delivery on the New York Mercantile Exchange settled 21.1 cents higher Friday at $7.503 a million British thermal units after a rally that took the market to an intraday high of $7.62/MMBtu.
Traders covered their short positions ahead of the long three day Presidents Day weekend as the nation heads out of winter and projected demand for the heating fuel remains questionable.
"People wanted to flatten their positions ahead of the weekend and see what the weather does next week," said Allen Rather, a private analyst in Victoria, Texas.
But the market's rally was also in line with higher crude oil prices and some forecasts that are calling for a return to colder temperatures after next week's warm up. A return to colder weather could threaten storage levels, said Guy Gleichmann, president of brokerage United Strategic Investors in Hollywood, Fla.
There is a chance storage "could actually threaten to penetrate below the five-year average, setting up a possible longer-term demand squeeze from the specter of elevated demand from the approach of a potential hotter than normal summer," he said in a note.
Meanwhile, the U.S. still has a hefty surplus of gas in storage, about 2.088 trillion cubic feet, almost 15% above the five-year average.
And not all meteorologists are convinced the weather will turn cold after next week's warming period.
"Any shots of cold will be seasonable in intensity and not lasting very long," said Jim Rouiller, senior energy meteorologist with Planalytics in Philadelphia.
Once the market decides which weather forecast it will follow, it will have to fill a gap after the $7.50/MMBtu level between $7.66/MMBtu and $7.835/MMBtu before it can go any higher, Rather added. If forecasts do not remain supportive, and the market drops, it will pull back to the $7.08/MMBtu-$7.16/MMBtu range, Rather said.
FUTURES AND OPTIONS TRADING INVOLVE RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE.
February 8th,
2007
United Strategic Investors Group
Guy Gleichmann, President
1926 Hollywood Blvd Suite 311
Hollywood, Florida 33020
(800)
974 – 8744
