Bears Draw First Blood, Send June Below $2.20
Following last Friday's near price-stalemate, bears were quick
out of the blocks yesterday, and within the first hour of trading
the June contract reached it's lowest level since April 19. The
market received a slight buying boost before the noon hour, but
sellers were at it again yesterday afternoon, carving out a $2.145
low in choppy trading activity. The June contract finished at
$2.176, down 4.9 cents for the session.
Sources felt yesterday's price erosion was a combination of
continued technical weakness mixed with a rapidly deteriorating
fundamental picture. "There was nothing positive to look at today,
one commercial trader lamented. "Nukes keep coming back up and
there is very little electric demand in the Ohio Valley or
Northeast. Texas is hot, but we can't carry the market by
ourselves." He also said storage buying, which supported physical
prices during the first 20 days of May, is almost non-existent now.
Looking ahead, Tim Evans of New York-based Pegasus Econometric
Group believes that the market's recent losses might be more
serious than just a pre-expiration sell-off. July, he argued, could
be dealt a blow to its self-esteem just minutes after June is
cleared off the board Wednesday when the American Gas Association
storage report is released. "An injection of more than 100 Bcf
would be a real slap on the nose for this market." While Evans does
not rule out the possibility of a triple-digit build, he feels that
a refill on the order of 80-100 Bcf is more likely. The comparable
figure for last year is 92 Bcf.
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