It was a heady couple of days for NYMEX, as prices surged above $5.00 and then hung on, bouncing around within a twenty-cent range as the market sought its comfort level. It all came to an end near the end of day Monday, as prices dropped precipitously to $4.90, and have been trickling down ever since. Today’s spot-on report of an 81 Bcf injection, which brought this year’s levels below last year for the first time, continued the mood of what appears to be a sheepish withdrawal from a giddy high.

We all know what happens to sheep…they get fleeced. NYMEX is taking its profits while it can, and nobody wants to be the last in line. It’s difficult to see at this point how far down things are going to go before they settle.

In terms of news, there is no more reason for this week’s downward turn than there was for the surge of the past two. Weather continues to be hot. Economic indicators released this week were unfavorable, but isolated. The weekly storage report would be making headlines if it weren’t being compared to last year’s record levels and found wanting.

Then there’s the Gulf. A federal judge struck down the Obama administration’s moratorium on offshore drilling, though the administration vowed to take action to reinstate it. Is that what instigated the selloff? If so, NYMEX has developed a taste for fairly risky speculation again…and a lack of taste for any news that doesn’t feed it. There was no clear indication that the moratorium was going to have a pronounced effect on supply. There’s no clear indication that the lifting is, either. But it seems like it was enough to get people to buy in and to sell off.

It all begins to look, if you will pardon us saying this, a bit volatile right now. The past month has seen movement of more than 25% up and down, most of it in fits and starts. A bit of a shock to the system after the predictable patterns of the Spring months. And a sign of what happens in a nervy market with no clear indicators to follow. We said several months ago that we expected NYMEX to keep bouncing; the question now is just how high and low the bouncing is going to be. Hot times, indeed.