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Futures Build on Last Week's Late Strength

Futures Build on Last Week's Late Strength

Much like Charismatic, winner of the Preakness and the Kentucky Derby, the futures market was off to the races Monday. After opening slightly more than a penny below Friday's settlement price, the futures market spiked dramatically higher in the first hour of trading as local buying pushed the market through last week's $2.315 high. June continued higher yesterday afternoon, finishing up 5.5 cents to $2.343.

A Gulf Coast trader said natural gas futures were pushed higher Monday by a reaction to a couple nuclear units coming offline, which caused a 5% spike in power prices. Cash prices for index gas, he continued, are also bullish. "Last winter you were lucky to get index plus one. Now index plus one and three quarters are popping up everywhere. In fact, prices are so attractive that people are using storage gas to take advantage of index premiums figuring they will be able to replace those supplies with cheaper gas at a later date."

A Chicago trader took a much more technical-based approach while pointing to last Thursday's double bottom at $2.17. "Since then we have had three sessions in a row with a higher high and a higher low. And each of those days has featured a settlement in the top half of the trading range. I look for prices to continue higher [today] and possibly take out the prior high of $2.40," he speculated.

Looking ahead to this Wednesday's American Gas Association storage report, the aforementioned Chicago trader looks for an injection slightly less than last year's 92 Bcf build.

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