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Futures Rebound Easily From Wednesday's Dip

Futures Rebound Easily From Wednesday's Dip

"It was like a bad dream," was one marketer's summation of Wednesday's 4-cent decline that was quickly recouped by yesterday's 4.1-cent advance. Another trader was a little more specific, attributing the downward blip to funds rolling positions from May to June. But regardless of the rationale, Wednesday's lower settle-the first one in the last seven sessions-looked like the Grand Canyon nestled among the Alps.

Things got back on track Thursday, as funds and locals continued to add to their long positions. The May contract finished up 4.1 cents to $2.137 in relatively light trading.

However, a Chicago trader is not convinced May has seen the last of sub-$2.10 prices and feels there could be some more selling pressure today. "[May] has flirted with the $2.17 level three times and not broken through it. I think that the market needs time to regroup and I look for the market to trend lower [Friday], possibly testing Wednesday's low of $2.075," he speculated

However in the long term, he remains bullish for both technical and fundamental reasons. "This market has just completed the transitional phase from storage withdrawals to injections. That means the market dynamics have changed and there is strong economic incentive for people to buy gas for injections while locking in a winter price." And do not underestimate the power of technical factors, which he feels have garnered the attention of non-commercial "fund" buyers. "They are building their long positions and it's not a wise move to bet against them because they have more money than God," he half-joked.

A Houston marketer took a slightly different slant. "I look for early strength relative to cash [Friday], followed by a decay in the afternoon spurred by light book-squaring ahead of the weekend." He predicts May will finish in the $2.11-12 area ahead of the weekend.

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