Weather, Technicals Tip Scales in Bulls' Favor
Activity in the natural gas pit at NYMEX has been
uncharacteristically quiet recently with low volatility and sub-5
cent trading ranges the rule rather than the exception. In fact,
the only real excitement in the past couple of weeks came Monday
when the July contract bounced 3 cents in a late rally. But even
that was quickly dismissed by many traders who considered it
nothing more than a freak, expiration-day anomaly in an otherwise
subdued market. Enter the August contract, which wasted little time
yesterday in moving dramatically higher in a rush of speculative
and commercial buying. The newly crowned prompt month finished up
7.6 cents for the session at $2.400.
A complimentary technical picture and weather outlook is how one
trader described the rationale for the price advance. "We have had
bullish weather and bullish technicals, but we haven't had them at
the same time," he said.
In its most recent six to 10-day forecast the National Weather
Service calls for above and much above normal temperatures over a
large swath of the center of the country. Private forecasts
corroborated the NWS outlook, sources said.
But fundamentals were not the sole factor impacting prices. A
broker said local buying ahead of the 40-day moving average was
also responsible. Locals, many of whom trade their own book and
thrive off market volatility, will often push the market in a
pre-emptive strike toward one of the moving averages. The 40-day
moving average for August is currently $2.343.
Looking ahead, the first potential wet blanket for this market
could come today in the form of the weekly storage figures released
by the American Gas Association. Sources feel that an expected net
injection of 80-90 Bcf will produce bearish overtones when compared
with last year's 72 refill.
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