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Traders Say $2.30 No Problem for May Futures

Traders Say $2.30 No Problem for May Futures

For the second trading session in a row yesterday the May contract dipped lower at the open, but was unable to completely fill in the chart created between last Wednesday's $2.18 high and Thursday's $2.20 low. And once that early selling pressure dried up, the market was free to rally on waves of buying by both local and commercial traders. The May contract pressed higher throughout the session, spiking above the $2.30 level at the closing bell before settling at $2.299, a 7.3-cents advance on the day. A technical difficulty at Nymex last night suspended the after-hours computer-only Access trading session.

Cash prices, which continue to be well bid, were viewed as a supporting factor in Monday's futures strength sources said. NGI's Henry Hub price for today is $2.23. "Futures imitated cash today," said Ed Kennedy of New York-based Pioneer Futures. "Futures were weak at the outset [Monday], but as cash prices ratcheted higher throughout the morning, so did the futures," he said, adding that a large commercial trader, short in both markets was seen as an aggressive buyer.

Although he felt it was still too early to make a prediction about the direction of the market heading into the May settlement Wednesday, a Gulf marketer admitted the supply-demand picture was tainted in the bulls' favor. "Funds are long, Houston is short, basis is tight. All indicators point to higher prices," he continued.

Kennedy agreed that May is a difficult call. "If cash stays strong then May [futures] will have a difficult time moving below $2.26. "But watch out for June," he warns. "Once May is off the board, June could come crashing back down to earth." June finished at $2.325 Monday, up 7.2 cents for the day.

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