Range-Bound Trade Keeps Bulls and Bears Guessing
For the third session in a row, natural gas futures see-sawed to
either side of unchanged yesterday as traders eschewed either
buying or selling the market outside of its recent trading range.
After etching out a $2.34 low Tuesday morning, speculative buying
was once again seen trying to push the July contract through
resistance at $2.40. But resistance held and the contract sank back
to finish at $2.367, a 0.5-cent decline on the day.
A Chicago area trader said fund groups were active on both
buying and selling fronts yesterday. "It seems like the market has
found a nice little trading range and there were people out there
buying the low $2.30s and selling the high $2.30s." Looking ahead,
he feels that the market will have a hard time maintaining this
lofty height amid mild weather and bearish storage injections.
"Market expectations call for an injection of 70-80 Bcf [today],
but I look for an 85 Bcf build. Despite above-normal temperatures
last week, there continued to be an economic incentive to sock gas
away in the ground." And that spread still exists, he continued.
"The [Henry] Hub traded at a 8 cent discount to futures for much of
the day today. Why wouldn't you take advantage of storage?"
New York-based Pegasus Econometric Group, on the other hand,
looks for a 90-110 Bcf injection to be a disappointment to bulls
who were looking for a lower and therefore more supportive number
following last week's early Northeast heat.
In daily technicals support exists at Friday's $2.325 low,
Pegasus said. Strong resistance at $2.47-48 will likely repel the
market, if the psychological $2.40 barrier is broken.
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