Despite the lack of supportive fundamentals and an electronic Globex trading blackout of just over an hour, traders pushed June natural gas futures convincingly higher on Friday to close at $3.546, up 17.3 cents from Thursday and 14.4 cents above the previous week’s close.

Electronic futures traders of natural gas and propane on the Chicago Mercantile Exchange’s Globex platform were left in the dark early Friday afternoon after a technical issue crashed the system. Trading on Globex for those commodities went dark at approximately 12:05 a.m. EDT and restarted at 1:25 p.m.

“As of right now, all we know is Globex experienced a technical issue,” said Anu Ahluwalia, a spokeswoman for CME Group. “It looks like it only affected futures and options of natural gas and propane contracts on Globex.”

Hencorp Becstone Futures broker Ed Kennedy said the outage was an inconvenience, but he noted that there were still ways to get business done. “CME Group is having some technical issues with the electronic Globex trading system,” he said. “The floor in New York is still trading because the only thing having problems is Globex. While this is obviously troubling, locked-out traders still have IntercontinentalExchange, the over-the-counter markets and the floor. So traders still have options despite this snafu. Traders can get their business done in the over-the-counter market, then move it to Nymex via Clearport.”

Commenting on the day’s action, Kennedy said the market’s bullishness was hard to support. “Friday was a strong day,” he said. “Despite the lack of supportive fundamentals, there is no denying the day’s direction. However, I think we are being dragged kicking and screaming to the altar of crude rather than marching to the beat of our own market’s drum.” June crude continued to show bullishness on Friday as the contract gained $2.08 to $53.20/bbl.

“In natural gas, we may get another 10 to 15 cents above Friday’s high of $3.591, but there really are not any fundamentals out there that warrant an extended bull move,” he said.

One often-overlooked trading tool is that of market sentiment. The idea is that when markets are about to change direction, the prevailing outlook is one of gloom, i.e., the popular notion of bearishness or bullishness is wrong. By using this idea traders will at times try to determine market bottoms or tops by studying sentiment indexes. Needless to say, the prevailing outlook for natural gas is bearish, and typically market sentiment at bottoms is most bearish and at tops most bullish.

Analysts are convinced, however, that as bearish as the sentiment is on natural gas, the market is not poised to turn around anytime soon. “In sentiment terms, natgas is clearly oversold. One need go back to 2001 to find a sentiment reading as bearish as current levels,” said Walter Zimmerman of United Energy. It’s his contention that for the market to turn around “sentiment divergence” is needed. “They need a new low in price accompanied by a higher low in the percent bullish reading. That would signal an exhaustion of the bearish sentiment. As yet there has been no such signal. Bearish sentiment may be at an extreme but natgas does not yet have that exhaustion signal.”

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