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Speculative Sell-off Tests Bulls Resolve

Speculative Sell-off Tests Bulls Resolve

Follow-through on the heels of Monday's Nymex strength gave bull traders an optimistic outlook early yesterday. However, their euphoria was short-lived when a combination of fund and local selling pushed the market down near stubborn support at $2.205. June trimmed its losses into the close, finishing 6.6 cents lower at $2.236.

A technical sell-off was responsible for Tuesday's price weakness said Ed Kennedy of Miami-based Pioneer Futures. "Locals were seen pressuring the market lower. Below $2.28 there was a huge vacuum. Once that level was broken, it uncovered a vacuum [that was] void of buyers. Funds added to the selling pressure, and the rout was on," he said. However, the move lower stalled near recent lows in the low $2.20s, which uncovered light scale up commercial buying, he continued.

A Gulf Coast trader attributed Tuesday's meltdown to weak fundamental factors and pointed to nuclear units returning from planned maintenance. Despite warming temperatures, prices will be unaffected because nuclear power will supply the bulk of the electric generation load, he continued.

Looking ahead to today's release of the American Gas Association storage report, sources expect the report to feature a 50-68 Bcf injection, which if realized will pale in comparison to last year's 100 refill.

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