Bulls vs. Bears; Call it a Tie Wednesday
After rallying more than 15 cent from last weeks lows, natural
gas futures took a breather Wednesday, trading sideways within a
tight 4.5-cent range. The June contract settled unchanged for the
day at $2.359.
The lack of upward momentum by the futures market gave nearby
cash prices an opportunity to play catch-up yesterday, several
traders noted. NGI's Henry Hub average for today of $2.36 is nearly
a spot match with the June close and just a penny more than
first-of-month index. A Gulf Coast trader feels that because cash
prices have moved up to match the futures, the ball once again
rests in the futures traders' court. "Ultimately it will all come
down to what the funds decide to do. Weather is benign, and until
that changes the market will continue to look to Nymex for
direction," he said.
Even though it will likely be weeks before the market can latch
onto weather reports for price direction, the market was not
completely without news yesterday. Released too late to affect
trading Wednesday, the American Gas Association reported 34 Bcf of
gas was injected into storage last week. That build, while falling
in line with industry expectations focused on a 20-40 Bcf refill,
paled in comparison with the 78 Bcf tally of a year ago. Total gas
in underground storage facilities now stands at 1,408 Bcf, which is
131 Bcf more than the same time last year.
Tim Evans of New York-based Pegasus Econometric Group said from
a purely economic perspective the storage report is undeniably
bullish. However, he admits it depends how much of the low
injection figure was already factored into prices. Looking ahead,
Evans thinks the market could initially trend lower in an apparent
repeat of last week's meltdown. However, he feels that "head fake"
lower will only lead to fresh buying interest, which ultimately
will propel the market past the $2.40 level by early next week.
Last night, the first part of his prognostication looked to be
right because the June contract was already 2.7 cents lower in the
after-hours Access trading session.
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