Still flush from Wednesday’s bullish storage report, traders bidup natural gas prices in the pit at Nymex yesterday to notch thefourth advance in as many days. Including yesterday’s 3.5-centgain, the June contract has rallied 34 cents from Friday’s $3.01low. After notching a $3.385 high, the prompt month closed at$3.352.

“Sure we were expecting higher prices, we just didn’t think we’dsee them that fast,” said Ira Hochman of New York-based TrotTrading Corp. “To be honest, we were looking for a little furthercorrection — possibly down to the $2.80s or $2.90s, before themarket would retest the upside. We were forced to cover shortspretty quickly,” he admitted.

However, it is clear that Hochman was not alone. There werequite a few traders betting on prices sinking lower this week.”Looking purely at technicals, we should have gone lower, anothertrader added. “Last week was an outside-down week on the charts. Weopened higher, and closed lower [than the previous week].”

However, when traders went home last Friday, few expected theseverity or duration of the heat wave that struck the East Coastover the weekend. By the time the front passed Wednesday afternoon,the damage was already done. But no sooner had the temperaturesbegan to moderate than the market was rocked by another fundamentalevent. Instead of affecting demand like the weather, the storagereport impacts the supply side of the market. At 58 Bcf, lastweek’s storage injection fell dramatically short of last year’s 72Bcf and also the six-year average at 71 Bcf.

Even dyed-in-the-wool technicians such as Hochman pointed to thestorage report as a price mover. The earlier release (2:00 P.M. ESTinstead of 4:00 P.M. EST) caused us to miss the move, he lamented.

Looking ahead, Hochman said he would not be the least bitsurprised by a correction ahead of the weekend. His first target isthe $3.305 level followed by $3.23. Alternatively, he seesresistance at Fibonacci extensions from the previous trading rangeat $3.47 and $3.62.

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