NYMEX should think about changing its name to ADHD.

After a few days of steady prices, NYMEX got restless and bored on Tuesday and decided to DO something. So it sparked another “rally for no reason.” There was a steady climb throughout the day, then a wild little mini-bubble at the end of the day Wednesday as June contracts closed out and July moved up to front-month status. Prices briefly spiked near $4.40 before settling down to end the day pretty much where they started. The steady rise continued throughout this morning right up to the news no one wanted…a robust 104 Bcf injection, slightly above projections.

NYMEX took an immeidate tumble, but then picked itself up, dusted itself off, and started all over again…up. When your’e in the mood to party, you party, and NYMEX appears poised to end the day on an up note, near today’s high of $4.30.

What’s fueling this latest round of optimism? Believe it or not, it might be hurricanes.

Remember market fundamentals? Occasionally, NYMEX gets nostalgic and decides to kick it old school, and it’s likely that the current run-up is fueled by the just-released report on 2010 hurricane activity, which suggests that this year is going to be a bear for wind. The Eastern Seaboard may get as many as 23 named storms (if they give give a storm a name, like Katrina or Andrew, it means it’s a big one). A lot of these may make their way into the Gulf of Mexico.

Of course, as we’ve pointed out before, the infrastructure for distributing natural gas in America is a lot more decentralized than it used to be. There are more pipes and more major trunk lines. There’s a lot more land-based drilling and a lot more unconventional wells located safely inland. The most recent reports tout shale gas as accounting for up to 40% of currently producing wells, compared to just 25% a year ago. No one knows whether hurricane damage on anything short of a catastrophic scale will have that much impact on production.

But what the heck, it’s an excuse to DO something. So NYMEX is doing. We’ll look to see prices test resistance before everyone breaks for the long weekend. Then we’ll look for things to settle down once the party’s over.

It’s conceivable that the most recent economic reports have fanned the flames, even though they were no better than “encouraging.” Growth continues. Job growth does not. Party on.

Meanwhile, in the Gulf of Mexico, it appears that oil has stopped gushing…and has started washing ashore for real. We can only guess at how bad it will get. We know for sure it will be very bad, indeed. What it will do to the mood of the country on environmental issues, and how this shift in mood will be reflected in the growing concern over the environmental consequences of shale gas drilling, are two issues that are well worth watching.

NYMEX spent the week playing a game of “get it while you can.” And for the moment, what can be gotten appears to have been got.

Last week’s rally continued through Tuesday, with NYMEX briefly breaking through resistance and flirting with $4.50 in early trading. But that was enough excitement for one week, and it’s been a steady, stair-stepped downward trend ever since, as investors took their profits and got off the ride.

It was fun while it lasted.

Today’s storage report should have been enough to reverse the trend…and briefly, that’s exactly what it did. The report listed a 76 Bcf injection, which was on the low end of predictions. More significantly, storage totals lost ground to both last year’s level and the five-year average. This marks the third straight week of modest injections, which is exactly the kind of long-term indicator that NYMEX has been looking for. But in the end, the market forces pushing NYMEX back to support held sway. NYMEX looks to end the day pretty much exactly where it began, around $4.10.

In other words, we’re at the tail end of another price bounce. Slightly longer in duration, but otherwise remarkably similar to the last three bounces that have marked NYMEX activity since April. We’ll look for prices to settle a bit closer to $4.00 and wait for it to happen all over again.

These are jittery times: jittery if you live by the coast in the Gulf of Mexico, jittery if you’re a participant in the European economy, jittery if you’ve got money anywhere near Wall Street, jittery if you’re an incumbent politician facing an election. NYMEX is clearly reflecting this jittery mood, and shows no sign of calming down. But unlike past years, these jitters don’t look to turn into boom-or-bust propositions. Just quick profits for some. And quick losses for others. A jittery stability, if you like.

At Cost Containment International, we recognize that this stability won’t last forever, and we’re “getting it while we can” ourselves. The current trend in NYMEX is allowing us to lock in at very attractive levels.

Meanwhile, it appears that T. Boone Pickens will finally see some payback for all the time, effort and money he’s poured into The Picken’s Plan. Reports are that the Natural Gas Act will get tacked on to a noncontroversial piece of legislation, passed by Congress and signed by President Obama before Memorial Day. This is slim….er…pickings compared to his original plan: a set of government-backed incentives designed to make it easier to develop and purchase natural gas-fueled vehicles. Not quite the national plan her originally envisioned, but a first step, nonetheless.

You know the saying about an old dog and new tricks? NYMEX is beginning to show signs of being an old dog in a new market.

Yes, we’re in the middle of another rally without reason. It started on Monday, and has progressed steadily, if gradually, through the week. Today’s weekly storage report, which showed an injection substantially below predictions at 94 Bcf, added a nice price spike to cap things off.

We’ve talked about “support” before: it is the price that forms the psychological bottom to a futures market. The price below which a market simply won’t go. NYMEX has been testing support for more than a month now, and seems to have found it around $3.90.

The complement to support is “resistance,” and it appears that NYMEX has found resistance at $4.40. With all the bouncing around that’s been going on since the beginning of April…NYMEX has looked for the past six weeks like that bouncing ball you followed when you sang along with your TV set (you may be too young to remember this cultural reference, in which case ask your parents about it)…prices have stayed within a fairly tight corridor. Today’s spike was the perfect example of a market testing resistance: up like a shot right to $4.40, then stuck in neutral the rest of the day. At this point, both support and resistance have been tested several times, and held. But between them, NYMEX has been bouncing around like a kangaroo that drank too much Red Bull.

What’s triggering this? Your guess is as good as that of anyone analyzing the market. Natural gas, at the moment, is about as boring as a market gets. Fundamentals haven’t changed since last year. The economy isn’t sending signals of recovery that are any clearer than they were a month ago. Supply is ample. Demand is steady, if muted. There have been no cataclysmic events, unless you’re a fish or a seabird in the Gulf of Mexico. It’s conceivable that last week’s meltdown on Wall Street caused a few investors to pull out of stocks and switch to futures, bringing some fresh investment cash with them. But there’s no good reason for what’s happening right now.

Which brings up another possibility: the NYMEX natural gas market simply doesn’t know any other way to operate. Decades of volatility have left natural gas investors hooked on the rush. So despite the evidence, and despite the repeated lessons of the past few months, they’re still playing the same games and working the same angles that were the stock in trade of the natural gas market back when it actually was volatile.

In other words, the natural gas market has grown up, but the investors haven’t. And we’re not taking this rally all that seriously…yet. We wouldn’t be that surprised if it turns out to be just the top of one more bounce.

The Deepwater Horizon disaster paid its first dividend this week, as a version of the Kerry-Lieberman (though no longer Kerry-Lieberman-Graham) bill on climate change was unveiled. How much farther it will get is very much up in the air, just as the oil that continues to spout from the wellhead stays very much up on the surface of the Gulf. That could change if something worse than tarballs starts showing up on shore.

At Cost Containment International, we believe that grown ups make the best decisions when it comes to energy. We’d rather enjoy the comfortable, if unexciting, security that comes from a well-executed long-term strategy that go chasing after a buzz. We think you’ll agree.

The EIA released its much-anticipated recalculation of natural gas production levels, known as the 914 report, and market watchers were startled to discover that…

…things didn’t change all that much.

Sorry, folks, flash in the pan. There had been talk that the revised figures would put natural gas production as much as 10% below previous estimates, leading to a run up on prices, but the final revisions came in at slightly over 1% for all of 2009, and less than 1% for 2010.

That news, and a spot-on injection of 83 Bcf in the weekly storage report, have NYMEX testing support again. But the $4.00 support appears to be holding fairly well, with all this bad news just tipping prices slightly below the dollar mark. The effect is more clearly seen looking beyond the front month, as futures prices through October are flattening out around the $4.00 mark. There are clearly a lot of people looking to make sure that they don’t go lower.

In other words, where we’re at is where we’re at. Storage is holding steady at nearly 20% above the five-year average, production levels (now more accurately reported) are strong, the economy is trundling along in neutral, and the most interesting energy news of the week is that oil and water don’t mix…which we already knew.

The oil spill that resulted from the explosion at the Deepwater Horizon platform has created an environmental reality that in many ways mirrors the market reality of natural gas right now. All kinds of things might happen…but nothing has yet. States from Louisiana all the way around Florida and up the Atlantic seaboard are bracing for the worst…and the worst could be very bad, indeed…but so far, weather conditions have worked to prevent the worst from happening, and its at least conceivable that the worst will never happen. Unless it does.

Sound familiar? An awful lot of maybe, an awful lot of wait and see.

An awful lot is hinging on that maybe. A major environmental catastrophe, with images of oil-soaked bird appearing night after night on the news, has the potential to sway public opinion at a time when energy legislation is stalled in Congress. A favorable turn of the wind and the tides, and the oil slick stays out of sight and out of mind.

We’ll be watching. From where Cost Containment International sits, nothing is ever out of sight.