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Weather, Storage Puts Bulls Back at Helm

Weather, Storage Puts Bulls Back at Helm

After opening at or near lows for the day, the futures market rallied higher Thursday, spurred by the confluence of bullish technical and fundamental factors. With a 9.1-cent advance, June broke through several key resistance levels before eventually finishing at $2.282 for the day. Estimated volume was a healthy 76,540.

A Gulf Coast trader said bulls were active in the market yesterday following the release of the American Gas Storage report. Taking into account the latest 72 Bcf injection, the year-on-year surplus now stands at just 103 Bcf. Another Houston-based trader said gains registered in the physical market also were supportive. "Utilities were definitely out in the market as buyers [Thursday]. It is hot down here, and cash offers just kept getting hit throughout the morning," he said.

A Chicago-area trader said forecasts calling for warm temperatures for the upper-Midwest this weekend were contributing to the strength. Chicago will see highs in the upper 70s this weekend according to the National Weather Service. However, fundamental factors were not the sole reasons for the price run-up yesterday, he said pointing to Wednesday's and Thursday's lows of $2.17 and $2.175 respectively. "The double bottom sent a strong message of rejection to the bearish trend. Plus, June's move higher placed it back above the 18-day moving average," he continued. The 18-day moving average for yesterday was $2.279.

Looking ahead, the trader predicted a combination of bullish storage reports and weather news will augment an already constructive technical picture.

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