Crude Oil, Weather, Short-Covering Lift Futures 7 Cents
For the second Monday in a row the futures market kicked off the
week with a lower open, which featured bears as the early
aggressors. That, however, is where the similarities between the
two weeks ended. Whereas prices continued down the slippery slope
last Monday, yesterday's trend was almost a straight line higher.
Sources said a number of factors-technical short-covering,
supportive weather forecasts and even a boost from the nearby crude
oil trading pit-were reasons for the 7-cent gain to $1.769 in April
"All eyes were on crude today," commented a trader who
downplayed the rally in natural gas. "Even though there is not that
big of a [price] correlation, natural [gas] has gotten some good
sympathy buying spilling over from the crude pit."
Tim Evans of New York-based Pegasus Econometric Group agreed
that natural gas received some "psychological support" from crude
oil, but thinks it is almost comical how the oil market is reacting
to the OPEC news. "First the market rallied on the general
announcement of the 2 million barrel production cut. Then the
market surged higher again last week as some of the specifics were
released, even though that information called for no additional
In addition to the support from the energy complex, Evans
believes natural gas has received some bullish news of its own
this past week. Technically, this market is starting to look nice.
Open interest reached an all-time high Thursday afternoon during a
price downswing, which usually means speculative selling was the
cause. That could cushion the downside and even spur a quick
rebound as those shorts move for the exit, Evans reasoned.
But technical factors were not alone in yesterday's price
action. Fundamentally, the market also received support from both
the six- to 10-day forecast released Monday and the 30-day outlook
issued last Thursday. Both call for considerable areas of below
normal temperatures, Evans said.
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