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Futures Lower in Late-Day Sell-Off

Futures Lower in Late-Day Sell-Off

Following three straight days of gains, bull traders had their winning streak cut late Monday after trading in positive territory for much of the session. And although many sources were expecting a pullback following the near 20-cent price spike last week, some felt the prompt contract's inability to make a new high was a negative feature. The May contract finished down 0.8 cents at $2.03.

"Locals were active but not dominant yesterday," was one gulf trader's explanation for the heavy buying and subsequent sell-off Monday. "It took some extreme length on the part of locals just to sustain the level in the upper $2.00s. But, once they realized they couldn't push the market through resistance, they were forced to dump their positions," he continued

And since speculators have been unsuccessful in their attempts to promote a settlement above $2.09, another market watcher feels the next push will have to come from the cash market. "It is unclear whether [Henry Hub] cash prices will open up this morning above or below $2.00. Prices above $2.00 would be a show of support for Nymex, but a "one" in front of the decimal point would be a negative price development. While he favors the latter scenario, he admits that April has not seen the last of $2.00 prices. "The next seven trading days we could see lower prices because Ohio Valley and Northeast storage operators will continue to sell a large portion of their baseload gas in the spot market. But once their storage facilities are ready, it will feel like spot pool constrictions as they pull those supplies off the market in favor of injecting it into the ground."

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