Rarified Nat Gas Soars Again

  • June 21, 2000
  • Marc Dupee

Natural gas ignited once again in trading Wednesday,
closing back near a four-year high. The American Gas Association announced that
its weekly survey of the industry showed natural gas movements into storage
increased just 64 billion cubic feet, leaving stockpiles over 23% below year-ago
levels. Low natural gas “injections” have been one of the prime
factors supporting natural gas and today’s report erased nearly all of the
9%-decline sustained just two days ago after the contract plummeted following
a  Turtle Soup Plus One Sell setup. August nat gas
(
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.266 at 4.369.

OPEC said it would increase oil production by 708,000
barrels a day in response to higher oil prices. Still, crude oil touched a new contract high on fear that
any OPEC increase will be insufficient to meet the current high demand for
petroleum products and avert possible supply shortfalls in the US.
Tuesday’s API report showing that gasoline stocks rose and distillates fell,
resulted in a slight decline in natural gas and a spurt in the price of heating
oil. August crude
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fell .0015 to .9919 and
heating oil
(
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Higher oil prices dampened demand for interest rate
futures as the high cost of energies could translate into inflation. September T-bonds
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fell 22/32 from a 10-day high to close at 96 20/32. September 10-year notes
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also slipped 17/32 to 97 26/32.

Stock indexes finished narrowly mixed. NASDAQ 100 futures
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from the Momentum-5
List, were the highlight of trading but were only able to add 6.00 to finish
at 4013.50, despite Microsoft’s
(
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Dollar index futures
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making gains against all of the major currencies. Due to their weighting on the dollar index, EuroFX futures
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exerted the largest impact, moving down after the European Central Bank
left interest rates unchanged and after the ECB President Duisenberg implied
that rates would not go up soon.

Interestingly on June 8, the ECU0 slashed down after striking
a new high because the ECB raised rates a more-than-expected 50 basis points.
The view on the 50-point move then was that it was too much and would impede a
nascent European economic recovery. Wednesday’s rate decision is having just the
opposite effect. Overall, the narrowing interest rate differential between the
US and Europe–and slightly higher continental economic growth– will likely
have the impact of rallying the ECU0 out of its cup with handle. 

In another indication of the potential down move in the ECU0
(and conversely up-move in the DXU0), the highly correlated Swiss francs
(
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(sell) signal on the Futures
Indicators List. Strength in the dollar is healthy for the US equity market.
The euroFX
(
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fell .0061 to .6151.

Japanese yen
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bottom formation. Traders remain wary of a possible intervention from the Bank
of Japan which may step in to keep the yen weak and encourage an export-led
economic recovery.

From the
Implosion-5 and Pullback From Lows
List, coffee
(
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PowerRating) continued slipping and settled at a contract low. I
recently outlined a method to use in markets registering on the Implosion-5 and Momentum-5 lists. After an initial drop and upward reaction, coffee fell back below its
initial 5-minute bar, providing entry before ending down 2.50 at 88.05. Click here for a description of
the Off The
Blocks Method.