Following a 4-day, 20-cent price rally, bulls in the natural gaspit cooled their heels yesterday as traders took profits amid ahost of negative short-term technical factors. After peaking forthe day shortly after 11:00 A.M. (CST) at $3.165, selling hit themarket in two distinct waves. It was the second thrust that pushedMay below key support at $3.10 to settle at $3.098, down 6 centsfor the session.

While technicals undoubtedly deserve their fair share of thecredit for the current $3.00-plus price level, they also wereprimarily responsible for yesterday’s sell-off, traders said. Whilecash prices moved higher yesterday morning to authenticate Monday’sfutures price advance, technicals were flashing sell signals. Inaddition to Stochastics, which are approaching the 90 level andthus extremely overbought, traders were also quick to point to twoprominent chart gaps, which were created over the past week on themove higher.

Formed when one day’s high is lower than an adjoining days’ low,chart gaps are a technical feature that garner plenty of marketattention. In this case the attention came in the form of sellingpressure as traders sought to push prices down through lastFriday’s $3.10 high. With that achieved, the next downside targetis the gap created between last Wednesday’s $3.03 high andThursday’s $3.045 low.

However, in order for prices to move lower they might need somefresh bearish fundamental news. And that could come as soon as thisafternoon when the American Gas Association releases its lateststorage report. Industry estimates call for anything from a 2 Bcfrefill to a 30 Bcf withdrawal. If the bulk of those estimates arecorrect and the AGA announces a withdrawal, it will be the firsttime since 1997 the market has pulled gas so late in April. Lastyear at this time the market injected 2 Bcf and the 6-year averageis a refill of 31 Bcf.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.