Cookin’ With Gas

  • September 13, 2000
  • Marc Dupee

The threat of hurricanes in the Gulf of Mexico and an
underestimation of national storage levels resulted in another all-time high and
positive close in natural gas.
Hot weather in the West, a structurally changed supply and demand equation, and
doubt that the fundamental equation underpinning nat gas are improving were
other factors pushing the October contract
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up .062 to 5.070, the highest level since the inception of the contract ten years ago.
Nat gas is used for
firing electrical generation plants, for heating, for cooling, and increasingly
seen as an alternative fuel source in the face the highest crude and heating oil
prices in a decade. 

The weekly figures from
the American Gas Association were released Wednesday came in 10 billion cubic
feet higher than the expected 50 BCF. Despite drilling and
extraction activity of natural gas coming in at record levels, we are still more than 400 BCF
below levels from one year ago. Exacerbating the view that gas inventories will
not be replenished in time to meet winter demand, the Energy Information
Administration announced Tuesday that its actual June total storage figures came
in at 339 BCF, lower than the 407 BCF previously forecast

Technically, the contract registered on the Momentum-5
List and continues to make good on an inverted head-and-shoulders setup, a
setup mentioned in the Sept. 5 Futures
Market Recap. 

An early indication of momentum–either up or down–is
often given by contracts on the New 10-Day Low List.
Dow futures
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list, closing 109.0 at 11,343.0, with JP Morgan  playing the critical role on the Dow
average for a second consecutive day, erasing nearly of Tuesday’s 8-point rise.
NASDAQ 100 futures
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techs and S&P futures
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Momentum-5
List member copper
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a two-week rally out of a high level consolidation to log a new high, but pulled
back to end marginally lower at 92.75. Copper demand
is often a leading economic indicator for economic growth, and its rise is at
odds with what many economists believe is a period of slower global economic
growth. 

December gold
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rallied $3 an ounce Tuesday (moving in opposition to the dollar), but gave back
all of its gains to close on its lows of the day. The contract’s
Multiple Days Low
Volatility and 6/100 Low Volatility
readings imply gold is poised to make a larger-than-normal move (in either
direction) as volatility reverts to its mean and its Implosion-5 List
reading suggests that the move could be lower. Dec. Gold closed .1 lower at
276.5. 

Soybeans
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selling from Tuesday’s slightly larger, 2.900 billion bushel soybean estimate by
the U.S. Department of Agriculture. The contract is setting up in a
cup-with-handle pattern, implying there could be another move higher. The USDA
said it would re-survey harvested areas and there could be another leg up if satellite photographs show a lower yield.
November beans fell 6 to 499 1/2, December soybean oil
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16.1000, and
soymeal
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Also in the grains, December wheat
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through to the downside after tagging a new
New 10-Day Low, ending 3 3/4 lower at 257. 

October live cattle
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lower, making good on Pullback From Lows
setups, ending .075 and .275 lower respectively. 

December cocoa
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high out of a rounded bottom pattern. This scenario, and rising volume on the
day, bode well for the contract to continue higher and overcome players shorting
the contract at Wednesday’s fresh 20-day high. Cocoa added another 20 to close
at 838, up from the contract low laid on August 30 at 776World supplies of cocoa
remain high, which have kept contracts near multi-year lows. 

 

December cotton
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falling off 18 month highs after the contract broke below a trendline Tuesday,
following rain and relief from blistering heat in Texas and the Mississippi
delta. Cotton closed .89 lower at 63.97.