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Futures Manage Minor Gains in Choppy Trade

Futures Manage Minor Gains in Choppy Trade

Adding to gains achieved in the Monday evening Access trading session, the May contract continued higher yesterday morning as bulls confidently bolstered their long positions. However, recent gains notched by natural gas have not come without a fight and Tuesday was no different. After topping out at $2.17, the prompt month reversed direction in the afternoon, nearly erasing its advance by the close. May finished at $2.136, up 0.8 cents on the day.

Sources agreed stronger cash market prices and constructive weather forecasts gave the market the reassurance it needed to tack on early gains yesterday. The National Weather Service six- to 10-day forecast released Monday corroborated last Friday's prediction by calling for below normal temperatures into the weekend for much of the upper Midwest, Ohio Valley, Mid Atlantic and Northeast. Henry Hub cash prices were up 8 cents Tuesday to $2.14.

Colder than normal temperatures, sources note, could also slow the rate of storage injections in weeks to come, thereby further constricting the year-on-year storage surplus. The American Gas Association (AGA) estimates that surplus to be 278 Bcf.

But in the meantime the market will have to get past this afternoon's release of fresh storage data and the Pegasus Econometric Group of New York is looking for the AGA to show another small injection similar to last week's 2 Bcf refill. The group adds that only an injection of more than last year's 22 Bcf figure would send a bearish message as it would serve to increase the year-on-year surplus for the first time in almost a month.

In daily technicals Pegasus sees support for May at $2.08-09. Resistance resides at the top of the chart gap to $2.19, with $2.30 and $2.45 looming as bullish goals over the intermediate term.

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