After a lower open at the bell yesterday, the futures marketmoved higher and easily recouped Tuesday’s losses. The Julycontract finished up 6.7 cents and in doing so registered anoutside up-day on the daily charts.

And while commercial and local traders were seen as buyers, EdKennedy of Miami-based Pioneer Futures believes the entire energycomplex received an unexpected buying push from inflationary hedgefunds that have been conspicuously absent from the futures marketrecently. “Fears about interest rates are resurfacing and that isprompting these money managers to once again look to hedge away therisk of inflation by buying the commodities that make up the CRB,”he said. Natural gas was added to the basket of commodities trackedby the Commodity Research Bureau (CRB) four years ago.

Inflationary concerns, however, were not the only bullishfactors yesterday. One Gulf Coast trader felt Wednesday’s strengthwas a bit of bullish optimism ahead of yesterday’s storage report.But when the storage figures were released last night by theAmerican Gas Association (AGA), “optimism” and “bullish” could nolonger be used in the same sentence. The AGA said that 91 Bcf wasinjected for the week ending June 4. That represents the first timesince the beginning of April that the 1999 refill was greater thanthe corresponding weekly build from 1998. Total estimated workinggas in storage is now 1,794, which is 41 Bcf more than at the sametime last year. The market was quick to digest the news inyesterday’s after-hours Access trading session where the Julycontract tumbled 3 cents lower to $2.43 by 6:15 P.M.

Looking ahead, Kennedy looks for the bulls and the bears to drawa line in the sand at $2.36. Above that level he sees limit-buyorders that will likely prop up the market. However, a break below$2.36 would trigger sell stops that “could propel the market andadditional 5 to 8 cents lower in a hurry.

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