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Late Sell-Off Spoils Bulls' Day

Late Sell-Off Spoils Bulls' Day

"Close, but no cigar," was one trader's apt description of the price action yesterday in the natural gas pit at the New York Mercantile Exchange. A session that saw the prompt month unable to break stubborn resistance near $2.40. After an early dip, the July contract spent much of the session near its $2.39 high before plummeting lower at the close. July finished at $2.343, down 1.5 cents.

Several traders were surprised by the higher Nymex prices that came in the face of "sluggish" cash market prices. "This is ridiculous," commented a exasperated Chicago marketer, who could not understand why his Chicago area sales were fetching a nickel less than the July futures screen. NGI's Chicago Citygate price for today is $2.34. He feels the price disparity will only get worse before it gets better. "[Today] will we get another bullish storage report. Last year the market injected 106 Bcf. We will be lucky to break 80," he reasoned.

Another Midwest trader was quick to point to increased pipeline capacity, which she feels has helped to soften Chicago prices. Northern Border is the only pipeline bringing in Canadian supply that is full right now. I think we may have underestimated the effect of that excess supply."

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