Storage Gives Bulls Much Needed Reprieve
After a brief and uninspired upside push was thwarted, natural
gas futures continued lower yesterday as follow-through selling
took prices to their lowest level since April. No fresh news was
seen influencing prices, and as a result bears remained solidly in
control, traders said. The August contract finished down an even
nickel at $2.141.
Many traders feel that the precipitous price slide has been a
function of speculative fund groups liquidating large net-long
positions. According to the latest Commitments of Traders data
released last week by the Commodity Futures Trading Commission
non-commercial accounts were net-long 40,152 as of June 29.
However, a Gulf Coast trader remains unconvinced the selling was
dominated by the funds. "It would stand to reason that they were
sellers, but open interest actually increased during Monday's
session. That leads me to believe that it was fresh selling rather
than long liquidation," he said. Where does that leave the market?
In a quandary, he continued. "If funds are exiting positions then
the market should head lower, but I am not convinced they have
abandoned their positions quite yet."
While bulls may have lacked the impetus to take prices higher
during the regular session Wednesday, they received a helpful boost
when the American Gas Association (AGA) released its weekly storage
data yesterday afternoon. According to the AGA, 69 Bcf was injected
into underground storage facilities last week. Falling short in
both comparisons with last year (74 Bcf), and expectations (80-90
Bcf), last week's refill figure was met with immediate buying when
the market reopened yesterday evening for after-hours Access
trading. As of 6 PM the August contract had recouped 3.9 cents to
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