April 05, 2010, 6:25 PM EDT
By Reg Curren
April 5 -- Natural gas futures advanced for a second day in New York on speculation demand for the industrial fuel will strengthen as the economic recovery gains momentum.
Gas rose as reports on jobs and manufacturing signaled that factories may boost fuel purchases as consumer demand rebounds. Industrial consumption represents about 29 percent of U.S. natural gas usage.
“We’ve had some good economic data,” said Tom Orr, director research at Weeden & Co., a brokerage in Greenwich, Connecticut. “Crude oil is breaking out; commodities in general are a little better.”
Natural gas for May delivery gained 19.1 cents, or 4.7 percent, to settle at $4.277 per million British thermal units on the New York Mercantile Exchange. The contract has risen 11 percent since closing at a six-month low of $3.842 on March 29. Prices have dropped 23 percent this year.
A Labor Department report released on April 2, when stock and commodity markets were closed for Good Friday, showed an increase of 162,000 in employment in March, including 17,000 positions at factories.
The Institute for Supply Management’s factory index advanced to 59.6 in March, the highest level since July 2004, according to a report on April 1. Readings above 50 signal growth.
“Gas prices may be helped by anticipation of stronger industrial demand for the fuel after the index rose,” Michael Fitzpatrick, vice president of energy at MF Global in New York, said in a note to clients today.
Oil Gains
Service industries expanded last month at the fastest pace in more than three years, the institute said in a separate report today.
Crude oil for May delivery rose $1.67, or 2 percent, to $86.54 a barrel in New York after touching $86.90, the highest intraday price in 17 months. The Reuters/Jefferies CRB Index of 19 commodities jumped to a 10-week high, and the Standard & Poor’s Index of 500 stocks gained 0.8 percent.
Technical analysis indicates that “an active sell signal” for gas ended with a settlement above the 10-day moving average of $3.99 per million Btu on April 1, according to Fitzpatrick.
Prices will meet “first” resistance at the 200-day moving average of $4.42 per million Btu and have support around $4, he said.
Moving averages are watched by some technical traders who monitor patterns for clues to price direction and may sell or buy based on those signals.
Output Revisions
The prospect of better demand for gas, coupled with pending revisions to U.S. Energy Department gas production data, helped push prices higher, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“The capital markets are pointing to a recovery,” Jarvis said. “There will also be a material impact on the production side of things.”
A downward revision in production data may “unnerve” speculators who had sold gas contracts in bets that prices would fall, Jarvis said.
Net-short position fell 4.4 percent to 177,857 in the week ended March 30, according to the Commodity Futures Trading Commission in Washington.
The department plans to revise U.S. gas output estimates in a report due April 29.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, rose 20.97 cents, or 5.6 percent, to $3.9268 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 193,130 contracts as of 2:35 p.m., compared with a three-month daily average total of 228,000. Volume was 317,294 on April 1. Open interest was 837,838 contracts, compared with the three- month average of 801,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Source: http://www.businessweek.com/news/2010-04-05/natural-gas-futures-decline-in-new-york-on-supply-concern.html
By Reg Curren
April 5 -- Natural gas futures advanced for a second day in New York on speculation demand for the industrial fuel will strengthen as the economic recovery gains momentum.
Gas rose as reports on jobs and manufacturing signaled that factories may boost fuel purchases as consumer demand rebounds. Industrial consumption represents about 29 percent of U.S. natural gas usage.
“We’ve had some good economic data,” said Tom Orr, director research at Weeden & Co., a brokerage in Greenwich, Connecticut. “Crude oil is breaking out; commodities in general are a little better.”
Natural gas for May delivery gained 19.1 cents, or 4.7 percent, to settle at $4.277 per million British thermal units on the New York Mercantile Exchange. The contract has risen 11 percent since closing at a six-month low of $3.842 on March 29. Prices have dropped 23 percent this year.
A Labor Department report released on April 2, when stock and commodity markets were closed for Good Friday, showed an increase of 162,000 in employment in March, including 17,000 positions at factories.
The Institute for Supply Management’s factory index advanced to 59.6 in March, the highest level since July 2004, according to a report on April 1. Readings above 50 signal growth.
“Gas prices may be helped by anticipation of stronger industrial demand for the fuel after the index rose,” Michael Fitzpatrick, vice president of energy at MF Global in New York, said in a note to clients today.
Oil Gains
Service industries expanded last month at the fastest pace in more than three years, the institute said in a separate report today.
Crude oil for May delivery rose $1.67, or 2 percent, to $86.54 a barrel in New York after touching $86.90, the highest intraday price in 17 months. The Reuters/Jefferies CRB Index of 19 commodities jumped to a 10-week high, and the Standard & Poor’s Index of 500 stocks gained 0.8 percent.
Technical analysis indicates that “an active sell signal” for gas ended with a settlement above the 10-day moving average of $3.99 per million Btu on April 1, according to Fitzpatrick.
Prices will meet “first” resistance at the 200-day moving average of $4.42 per million Btu and have support around $4, he said.
Moving averages are watched by some technical traders who monitor patterns for clues to price direction and may sell or buy based on those signals.
Output Revisions
The prospect of better demand for gas, coupled with pending revisions to U.S. Energy Department gas production data, helped push prices higher, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“The capital markets are pointing to a recovery,” Jarvis said. “There will also be a material impact on the production side of things.”
A downward revision in production data may “unnerve” speculators who had sold gas contracts in bets that prices would fall, Jarvis said.
Net-short position fell 4.4 percent to 177,857 in the week ended March 30, according to the Commodity Futures Trading Commission in Washington.
The department plans to revise U.S. gas output estimates in a report due April 29.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, rose 20.97 cents, or 5.6 percent, to $3.9268 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 193,130 contracts as of 2:35 p.m., compared with a three-month daily average total of 228,000. Volume was 317,294 on April 1. Open interest was 837,838 contracts, compared with the three- month average of 801,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Source: http://www.businessweek.com/news/2010-04-05/natural-gas-futures-decline-in-new-york-on-supply-concern.html
Comments
Post a Comment