With Fundamentals Away, Technicals Rule the Day
Whether the cash market follows the futures screen or vice-versa
is the source of considerable conjecture and debate in the natural
gas market-almost on a daily basis. Although there have been times
when futures have been the driving force in the market, many feel
that cash prices, egged on by solid heating demand, have lifted
futures prices out of the doldrums this month.
Prior to yesterday's trading the two markets sat neck-in-neck,
with the Henry Hub average of $1.75 nestled up close to the April's
$1.748 settlement Wednesday. That prompted sources to contend that
the market rested at a delicate crossroads yesterday. Would prices
continue higher; and if so would the cash market continue to set
the trend? But the answer to that question was a resounding "no"
yesterday. After the futures market received no early signal from
the cash market, traders, armed only with technical analysis,
deposited the prompt contract down 6.1 cents to finish at $1.687 on
But the bulls did not go without a fight. A Houston trader
pointed to heavy congestion in the $1.757-784 area, which contained
the 18-, 20-, and 30-day moving averages, as a difficult hurdle for
the market to move past. "The market tested resistance right off
the bat [Thursday] morning, but the buyers ran into selling
pressure and the rout was on," he said. However, he also felt that
support in the $1.64-66 area, backed by eager commercial buying,
could limit further losses.
However, Sandy Trot, of New York-based Trot Trading Corporation
takes a more bearish slant. We saw everyone-funds, [speculators],
and trade come out as sellers when [the market] hit $1.77." He
continued by saying that if April is able to close below $1.70
(which it did yesterday) then the market could be in for more
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