It was a tale of two markets Friday at the New York MercantileExchange. Softer cash market prices helped push futures priceslower early in the trading session. Those losses, however, werequickly erased in the afternoon as traders weighed the impact offorecasts calling for warming temperatures this week. The Julycontract finished at $2.437, 4 cents higher for the day and 7.9cents for the week.

Traders agreed slackened weekend demand for physical purchasesgave the market its early downward direction. But whereas the cashmarket was unable to climb out of its early price dip Fridaymorning, the futures market was able to notch a $2.44 high justbefore the close.

Minutes after the close, the National Weather Service confirmedthe speculation of warmer temperatures this week. The six- to10-day forecast calls for above-normal temperatures across theentire Northeast, extending across the upper Midwest all the way toeastern Montana, Wyoming and Colorado. Within that large swath ofabove-normal readings, the NWS expects to see much above normalreadings from the Dakotas to Lake Michigan.

The Pegasus Econometric Group of New York feels that warmerweather will continue to keep storage injections lean and themarket well bid. However, the group warns the amount of potentialbuying may be waning. They cite the 326,099 in open interest as oflast Wednesday versus the 347,561 all time high from April 26. “Asthe total approaches that level, the amount of potential freshbuying will shrink, making further gains dependent on commercialshort-covering, which may be difficult to trigger,” the group wrotein its Power Report dated June 2.

Susannah Hardesty of Energy Research and Trading in Indiana, onthe other hand, remains unflinchingly bullish on technicals,weather, storage concerns and fund buying. “Current estimates wouldindicate that the highest peak of the Spring high could be as highas $2.600 to $2.900 for the first futures contract, if bullishweather patterns prevail as expected during the first half of June,injections continue to be disappointing, the trend appears to be inthat direction, and speculative trading funds continue to be strongbuyers.” Hardesty’s target for this high is between June 7 and June25.

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