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Traders Look Both Ways for Market Insight

Traders Look Both Ways for Market Insight

Like a bouncing ball, natural gas futures continued to chop sideways yesterday as scale down buyers took advantage of low prices afforded them by the market's dip Wednesday. The August contract finished up 3.3 cents at $2.179, and in doing so continued its five-day streak of alternating advances and losses.

No fresh news was seen to influence the market Thursday and as a result traders were forced to glean what they could from old news. Several traders agreed the American Gas Association storage report, which said 59 Bcf was injected into storage last week, was a supportive feature in the market. But while Ed Kennedy of Miami-based Pioneer Futures does not believe the report necessarily hurt the market, he also does not believe it played much of a factor in the price advance. Instead, he points to aggressive scale down industrial buying that entered the market in the low $2.10s as a major reason for the market's strength. "It is no secret that natural gas typically makes its yearly lows between mid-July and mid-August. The market has found a very solid level of support at $2.10 and every time August tries to break through that level the volume of the buying picks up.

Does that mean we've seen our summer low? Possibly, says Kennedy who warns that while we could still move lower, the weather might come into picture again. "There are some models that call for a ridge of high pressure to move into the East for end of July. It is still too early to tell, but if that happens it would certainly give the market a bullish push," he reasoned.

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