May Futures Break Resistance, Move to 6-Month Highs
Feeding off momentum gained in both the regular and access
trading sessions Wednesday, the futures market muscled higher
yesterday as the May contract notched its highest price since last
November. After gapping higher to open at $2.215, May traded mostly
sideways Thursday morning before an early afternoon buying surge
mapped out yesterday's high price at $2.23. The contract finished
just off that level at $2.225, a 5.1-cent advance on the day.
Sources agreed that a smaller than expected storage figure
released by the American Gas Association Wednesday night was the
impetus needed to propel the market above its recent trading range.
Prior to yesterday the May contract was locked between the $2.075
and $2.19 for 7 trading sessions.
However, a Gulf Coast trader thinks strong pricing in the April
cash market has been silently supporting the May futures price.
"Lately, there seems to be someone willing to bid the Henry Hub a
penny above the Nymex print. In a forward injection market, there
is no reason for spot cash prices to be at a premium to the futures
and so May has been playing catch up." NGI's Daily average for the
Henry Hub was today was $2.25. He continued, noting that whereas
most Gulf trading points trended lower in late morning business,
the Henry Hub moved higher. "Looks as if someone is buying physical
and sticking it in the ground in the hopes it will buoy the futures
market," he speculated.
Now that prices have entered a new trading range, how much
higher will they go? As always opinions are mixed, but the market
will receive some potentially telling data this afternoon when the
bi-weekly Commitments of Traders report is released. The last
report with data as of April 6, showed that non-commercial traders
were net long over 15,000 positions. But a Houston trader thinks
that figure has swollen to around 36,000 since then, which would
help to explain the simultaneous rise in prices. The May futures
close on April 6 was $2.013, more than 20 cents below current
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