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NYMEX sinks to 11-month low; cash below $4


August 27 - Mild weather, grim economic data and the lack of a storm threat to Gulf of Mexico production combined to send the September NYMEX gas futures contract down 5.4 cents August 26 to settle at $3.817/MMBtu -- the lowest front-month close in 11 months. (See related chart: NYMEX Henry Hub Natgas 01-Mo Floor (USC/MMB)).


In the spot market, cash prices also lost ground on moderating temperatures in most regions.


"The market's just having a hard time getting support," said analyst Phil Flynn with PFGBest. "If natural gas can't take a stand at this level, I'm expecting a big drop like we had last September."


The August 26 settlement was the lowest for a prompt-month contract since September 28, 2009, when it closed at $3.73.


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Analyst Tom Saal with Hencorp Becstone Futures said he was not sure if the September contract has bottomed out. "They just keep beating it with an ugly stick," he said.


The contract, which expires August 27, has dropped for the last seven consecutive trading days, losing $1.106 since July 30.


In the cash market, Henry Hub averaged nearly 15 cents lower in the low $3.80s after dipping into the mid-$3.70s on IntercontinentalExchange mid-session.


Texas points showed some relative strength, shedding less than 10 cents at both the Katy Hub and Houston Ship Channel as 90-degree heat continued around Houston.


That lifted the Ship Channel to a 9-cent premium over Henry Hub, a dramatic shift from the average 6-cent discount during the past month.


All points east of Henry Hub remained at a discount or flat to the Louisiana point as demand in the premium Northeast markets remained low.


A Florida trader said trading in the Sunshine State has been quiet since spotty rain showers have washed away much of the demand for gas.


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