After a hectic trading week that saw the June contract tradewithin a choppy, 15-cent range, traders tiptoed through Friday’snatural gas session. A late rally and retreat right before theclose of trading was the only real excitement in an otherwisefeatureless trading landscape. The June contract finished at$2.288, up 0.6 cents for the day and 1.5 cents for the week.

Although some traders argue that prices are in a consolidationphase after topping out at $2.405, Susannah Hardesty of EnergyResearch and Trading believes the market still has upsidepotential. Her forecast, which is based on a series of spring andfall highs and summer and winter lows, calls for the prompt futurescontract to make a spring high between now and June 25th, on a movebetween $2.60 and $2.90. Factors consistent with her prediction arestorage injections below last year, above normal projectedtemperatures for most of the country, continued aggressivespeculative fund buying and a large commercial short position,Hardesty said.

A Houston marketer agreed commercial traders have hedgedthemselves and will be looking to buy back the June contract duringits last three trading days. However, he thinks that will beoffset, at least partially, by speculative accounts which will berolling out of June positions in favor of July. “The net resultwill be a widening of the June-July spread into expiration,” headded.

He also remains bullish, although more cautiously so thanHardesty, citing false breakouts both above and below the recent$2.20-30 trading range. “Monday we broke above $2.30 only to haveprices move lower Tuesday. Then after a move below $2.20 could notbe sustained Wednesday and Thursday, we are back near the top ofthe $2.20-30 range.” However, he believes the next move will beinspired by a fundamental phenomenon rather than a technical one.”This market will have a fair amount of gas off the market out Westbetween the outages on El Paso and at Opal next week. Plus, theentire hydrocarbon complex has been very strong lately. Natural[gas] could see sympathy buying if crude and related productscontinue to trend higher,” he reasoned.

In daily technicals June finds support at 2.05 and 2.15, whichcorrespond with 50% and 38% fibonacci retracement levelsrespectively. Congestion also exists at the $2.17 double bottom, achartist advised. On the upside, resistance lines up at prior highsof $2.315 and $2.405, he said.

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