Bears Shrug Off Storage, Deposit Market Lower
After a brief uptick during the Wednesday night Access trading
session, natural gas futures continued lower yesterday at the New
York Mercantile Exchange and settled below key support levels. July
finished at $2.285, after carving out a $2.27 low early Thursday
morning. Estimated volume of 95,938 was almost double that of
Monday and Tuesday.
Most sources contacted by NGI were at a loss to explain the
futures weakness in the face of supportive weather forecasts and a
year-on-year storage surplus that was erased to zero last week. The
National Weather Service released its six- to 10-day forecast
Wednesday, which calls for a warming trend next week across much of
A Dallas-based source, however, points to the mild weather that
much of the nation is currently experiencing as a bearish factor in
the near term. "Cash prices came off this morning and brought the
futures market with it. Cash has not been supporting the screen
very well lately and futures finally fell under its own wait," she
Technically, she believes the July contract will have to dodge a
bullet today if prices have any chance of trending higher. "The
real test will be if the market settles below the 40-day moving
average for the second day in a row Friday. Typically two straight
settles below the 40-day will spawn a round of selling. If that
happens, then a move back into the high $2.10s is not out of the
question." The 40-day moving average for July is currently $2.325.
A Houston trader agrees that the market is vulnerable to further
losses tomorrow, but warns that bulls have had good luck lately
heading into the weekend. Despite mixed cash prices and market
sentiment pointing lower the futures market has posted gains the
last three Fridays.
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