Futures Rally has Sources Looking to Past
Feeding off late gains notched by the expiring April contract
Monday, May kicked off its campaign as the spot month at Nymex
yesterday by continuing higher in active trading. And whereas April
contract made its mark in a late short squeeze, May was prompted
higher throughout the day by a steady stream of commercial and
speculative buying. Several sources also pointed to buy-stop
orders, which were triggered as the market moved through the
$1.93-95 range as a reason for the strength. May finished up 9.5
cents at $1.978.
Looking back to the end of January, a Houston marketer said the
February contract's strong finish, followed by March's strong start
and subsequent fall could be a blueprint for this market. "March
blasted higher initially into the mid-$1.80s but then came off hard
for the rest of the month."
He continued, saying that while the month of April will likely
experience the same bearish weather as February, it will not share
the same storage situation. "Most Northeast storage operators will
rest their storage reservoirs for the next two or three weeks
before the injection cycle. That will make gas plentiful for the
first part of the month and somewhat harder to find for the second
half," he reasoned. Based on that, he feels the May contract will
come under selling pressure until April 15-18, when demand for "the
physical molecule" kicks in to lift prices.
Another Gulf marketer agreed but took a different path down
memory lane. "After the March 1.666 expiration you couldn't give
gas away and people were calling for the market to sink to $1.50.
But the weather finally kicked in and prices never saw that level.
And now prices are strong and everyone seems short gas. I look for
April to give us a roller coaster ride full of both higher and
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