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Natural Gas Futures Tumble on Bearish AGA Report

29 November 2001 , 07:03419
The January contract lost $0.219 to $2.732 per MMBtu. The market tumbled after the AGA reported a 12 Bcf storage injection late on a day when there was enormous volatility due to the troubles facing Enron. First
prices spiked higher on the Enron news, before beginning to back off even before the AGA report was released. The January contract was trading in the low $2.90's when news broke that S&P and Moody's had
downgraded Enron's debt to junk status, triggering an obligation to immediately pay billions of dollars in debt. Dynegy subsequently called off its planned $8.4 billion acquisition of the company. The January contract surged all the way to $3.20, before turning around and falling all the way to $2.74 with a little more than an hour left
in the session. They then chopped around until the AGA report, when they hit a new session low of $2.70. The Enron news sparked the market higher with no real justification as people panicked and shorts covered, the markets spiked and stops were run. But then prices quickly dropped back as the reality of the market fundamentals kicked in. Then the bearish fundamentals were reinforced by the AGA report of 3.144 Tcf in storage, the highest since reporting began. Storage is 95% full. A year ago there was a 146 Bcf withdrawal. Also,
there is no real intense cold in the forecast, so it doesn't look like fundamentals are going to change any time soon. Natural gas for next day delivery across the US and Canada was generally $0.30 ? $0.50 higher yesterday, pushing toward convergence with the NYMEX. Natural gas for next day delivery at the Henry hub jumped $0.45
higher to $2.36 per MMBtu.

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