Tight Trading Range Leaves Futures a Half-Cent Higher
After etching what some feel could be the range for the
remainder of the April contract's life with Monday's $1.69 low and
Tuesday's $1.825 high, the market stayed pat Wednesday-trading
inside a tight 3-cent range. And while no fresh fundamental forces
were seen to usher the market in either direction, sources
indentified a host of limiting technical factors in yesterday's
price action. The April contract finished up 0.5 cents to $1.795.
The New York Mercantile Exchange was forced to suspend trading
twice during the Tuesday evening Access trading session due to
problems with data feeds to outside vendors, a Nymex spokesperson
said. After a 5-minute delay, the after-hours computer-only session
opened at 4:05 PM EST and traded until 4:55 when trading was once
again suspended. The second outage lasted until 7:25 PM.
And Ed Kennedy of New York-based Pioneer Futures was quick to
point to the abbreviated Access session as an early determinate in
yesterday's trading. "There was quite a bit of pent up selling
[Wednesday] following the late drop right before the close
Tuesday," he said. However, just as the buying had dried up on
Tuesday's early move higher, so did the selling in Wednesday's move
lower. "The market just died at that point," Kennedy continued.
Despite being mildly bullish in the intermediate to longer term,
Kennedy is not convinced higher prices will arrive in time to
salvage the April contract, which expires Monday. "I am looking for
a range of $1.67-80, with an expiration price around $1.75," he
A Houston marketer agreed with the lower end of Kennedy's range.
"It's always tough to pick a bottom, but I think you need to own
anything in this market with a six after the decimal point. He
continued, adding that hedging for the upcoming storage injection
season will become an increasingly important factor in the
direction of prices. "With the market in its current state of
contango (a situation in which prices of out months are
successively higher going forward) it makes economic sense to buy
prompt month futures and sell the out months to cover your storage
injections. That should put upward pressure on the front month," he
The AGA released its storage report last night, which estimated
87 Bcf was withdrawn during the week ending March 19. Although some
sources were quick to tag the news as a non-factor in the market,
others viewed the data as "slightly bullish" for prices. "Not only
did [the withdrawal] eclipse most expectations, but it also was
more than last year's 78 Bcf pull," a Chicago-area trader noted.
There is now 1,372 Bcf of gas in storage, 346 Bcf more than last
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