For the second day in a row, the futures market raced off to afast start as steady buying bolstered prices to their highest marksince December. But in contrast to Tuesday’s price action, whichfeatured the May contract finishing near its daily high,Wednesday’s rally ran into heavy overhead selling that trimmedthose gains into the close. May finished up 3.5 cents to $2.013,after notching a $2.07 high.

Sources maintained that technical factors were once again at theheart of the rally. One trader saw a flurry of buying interest asthe May contract worked above the 200-day moving average at $2.015Wednesday. He remains bullish in the intermediate- to long-term butwarns that markets rarely move in straight lines. “I fully expectedthis afternoon’s pullback. We flirted with but couldn’t break aboveseveral significant levels of resistance this morning. If we settlein the lower half of the [Wednesday’s] trading range, prices willlikely continue lower into the weekend,” he said with still an hourleft in yesterday’s session. And by early yesterday evening hisprognostication was looking spot on. After settling in the lowerhalf of its range, the May contract continued 3.8-cents lower to$1.975 in last night’s Access trading session.

Tim Evans of New York-based Pegasus Econometric Group added thatwhile there is no strong fundamental reason for the push to higherprices, the influence of sentiment swings cannot be discounted.”However, you have to be careful, because those swings can be veryfickle and leave the market vulnerable to a reversal.”

But it was difficult for traders to look past fundamentalfactors yesterday evening when the National Weather Service (NWS)and the American Gas Association (AGA) released their reports. TheNWS six- to 10-day forecast calls for normal and below-normaltemperatures to be confined to areas west of the Rockies. Theremaining three-fourths of the country is expected to seeabove-normal temperatures, the NWS said.

And if that wasn’t enough salt in bulls wounds, the AGA addedsome more when they announced that only 37 Bcf was withdrawn fromunderground storage facilities last week. Although that figure wasmore than the 20 Bcf for the same period last year, it fell shortof the 40-70 Bcf expected.

While those reports certainly took the wind out of bulls’ sailsWednesday, Evans thinks the question of whether the rebound is deadis still open to debate. “It depends on whether funds stick withand continue to build to their long positions or head for theexits. We could continue to see weakness into next week as buyerstake a wait-and-see position.”

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.