Speculative Buying Boosts Futures into Weekend
After watching prices tumble 10 cents in a tumultuous last hour
of trading Thursday, bulls were quick to assume control of the
market Friday as they continued to add to their already hefty long
positions. The September contract finished at $2.698, up 5.1 cents
for the day and 15.5 for the week.
Looking ahead, traders are still divided on the issue of market
direction in the days and weeks to come. "The next move is down,"
exclaims Susannah Hardesty of Indiana-based Energy Research and
Trading. "Prices peaked on the second top of the huge roller
coaster, (double topped at $2.75, testing the $2.72 highs of last
week) and dropped significantly into the close of trading
Thursday," she wrote in the Aug. 5, 1999 Natural Gas Weekly Report.
Her prediction is based on a number of factors including the
failure to remain above historical chart resistance at the $2.725
high made on April 8, 1998, and the bearish storage and weather she
looks for this week.
However, Ed Kennedy of Miami-based Pioneer Futures disagrees
that the $2.72 and $2.75 highs from the last two Thursdays
represent a double top and maintains that by making a higher high
the market is still firmly in an uptrend. But before the market is
able to tack on sizable gains, it may have to check lower, possibly
as low as the mid- to upper $2.50s, he said.
But many traders believe that if the market is going to make new
highs, it will need to receive a boost from the weather. According
to Brad Nesiba of Omaha-based Strategic Weather Services, that
could come later this week, when above-normal temperatures find
their way eastward.
"A trough of low pressure across the Northern Plains on the 18th
and 19th should squeeze hot air back into sections of the
Mid-Atlantic and Northeast by next weekend. But this system will
not stick around like the last one so the above-normal temperatures
will be relatively short-lived," Nesiba said. Will Texas see any
relief? "Don't bet on it," he continued. "At this rate the only
thing that will cause temperatures to moderate in Texas would be
some sort of tropical activity in the Atlantic or Caribbean. And
even that looks to be at least 2-3 weeks away."
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