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Futures Tumble Lower into Weekend

Futures Tumble Lower into Weekend

Access trading kept traders on their toes late last week. After a more than 7-cent rally in last Wednesday's computer-only trading session, the June contract doubled back Thursday evening, slipping more than 5 cents lower before Friday's open. And the selling would not stop there as bears continued their push toward lower prices throughout the trading session Friday. June finished down 8.6 cents for the day at $2.253.

"What a difference a day can make," quipped a trader who was more than surprised by the market's about-face leading into the weekend. "I guess the market wasn't quite ready for $2.40 gas," he offered. Sandy Trot and other prominent local traders were "aggressive buyers" Thursday in an attempt to push the June contract higher, a source noted. "But there was little support from other market segments and [locals] were forced to cover into the weekend."

"A technical headfake," was the Pegasus Power Report's explanation for the choppy trading last week. "When natural gas futures failed to better their overnight highs [Wednesday] it encouraged profit-taking into the close [Thursday] and further selling on Access. However, the group remains bullish on fundamentals, adding that the next couple storage injections will be hard pressed to keep pace with the 78 and 100 Bcf refills of last year. "This pullback seems to be a test of nerve for recent buyers rather than a shift in the underlying fundamentals," Pegasus said.

Tom Saal of Miami-based Pioneer Futures, on the other hand remains unimpressed with the low storage figures and feels the market should continue lower for at least a couple more days. "From there it is anyone's guess. But the one thing that you can count on is volatility-it's back and price swings like we saw [last] week will happen with more frequency in the months to come," he speculated.

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