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Storage, Weather Send Traders Mixed Signals

Storage, Weather Send Traders Mixed Signals

After a spirited rally Tuesday that propelled the August contract to its highest level since July 15, the market took a breather Wednesday as traders elected to wait on the sidelines ahead of fresh fundamental news. The prompt month finished down 0.6 cents at $2.394 in choppy, range-bound trading.

"Locals, led by Sandy Trot were buyers on the open in an attempt to trigger buy stops in the $2.42-44 area. But follow-through buying dried up and they were forced to liquidate their long positions," said Tom Saal of Miami-based Pioneer Futures. Saal feels it might have been the bulls last opportunity for a while. "The market's failure to put together a more substantial rally following the hot weather forecasts may have been the coup de grace," he said.

But just as traders were beginning to discount forecasts calling for warm weather, the National Weather Service (NWS) upped the ante. In the latest six-to 10-day forecast released yesterday afternoon, the NWS looks for an even larger expanse of above-normal temperatures. And within that swath of above-normal temperatures covering most of the U.S. east of the Rockies, the NWS expects much-above normal temperatures from the central Great Plains across most of the Midwest. Only the southern tip of Florida and the extreme West Coast will see below-normal temperatures.

The bullish weather report may have been tempered somewhat by the weekly storage figures, however. The American Gas Association said 91 Bcf was injected into underground storage facilities last week, which was more than preliminary estimates of about 80-90 Bcf and last year's 72 Bcf figure.

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