After a quick check lower to fill in a small chart gap, thefutures market continued higher last Friday in an abbreviated, butextremely active trading session. The July contract finished up 7.6cents to $2.358, capping a two-day, 14.8-cent advance. Estimatedvolume was 66,263.

Several traders were surprised by the market’s ability to tackon gains ahead of the Memorial Day weekend, in the face ofsoftening cash market prices. In fact, a Gulf Coast marketer calledFriday’s futures price action an aberration, and believes themarket will come back in line with physical market values by earlythis week. NGI’s Henry Hub price for today’s gas flow is $2.23. Buta Houston-based trader was quick to point to Friday’s considerableestimated volume figure, which he felt “legitimized” the advance.The $2.25-28 level was the pivot point, he continued. “A move below$2.25 and locals would look to retest the $2.17 low. A print above$2.28, and they would initiate a move to hit trade buy stops above$2.30,” he said. The latter scenario came to fruition and bymid-morning Friday the July contract was spiraling towards its$2.37 high on the day.

However, the most compelling piece of bullish news last weekmight also have been the most subtle. Open interest Fridayincreased by more than 4,000 contracts and the aforementionedmarket watcher feels that could be an indication funds are addingto their length. “The storage report was a saving grace to themarket at a time when funds could have just as easily reversedtheir long positions.” Instead, he feels that the move higher inlast Wednesday’s Access session gave them the green light to add totheir positions rather than liquidating them.

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