In the ongoing turf war between bears and bulls, it's become clear that bears are slowly wresting control of a market that logically should be on a bullish trajectory. What is also clear from last week's market action is that there's good reason for bulls to begin their retreat. After bottoming out at a life-of-contract low of $2,263 per million Btu on Dec. 28, February Nymex futures began a comeback after taking over as prompt month two days later -but the advance stalled after the contract rallied into the low $2.70s last week. This is not where a gas rally would be expected to top out during the peak heating season if the market is as undersupplied as many analysts contend, especially with LNG feed gas needs cruising at 11 billion cubic feet per day - up 1.6 Bcf/d from last year.
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