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Short-Covering Favors Bulls in Quiet Pre-AGA Trade

Short-Covering Favors Bulls in Quiet Pre-AGA Trade

The futures market continued higher Wednesday in another quiet trading session where local buying was too much for scale-up trade selling. But despite its 2.6 cent advance to finish at $2.264, the July contract fell short of filling in the chart gap up to Friday's $2.283 low. Estimated volume was a relatively light 56,980.

A Houston-based marketer cited warming temperatures across much of the central and eastern U.S. as a reason for the price advance. In its latest six- to 10-day forecast, the National Weather Service (NWS) looks for above-normal temperatures to cover a huge swath of the North from New England to the eastern Plains. Above-normal readings are also expected for most of New Mexico and the western half of Texas.

Ed Kennedy admits that revised weather forecasts didn't hurt the price strength, but adds that short-covering ahead of the weekly supply data from the American Gas Association (AGA) was also a factor. As it turns out, preliminary estimates calling for 80-90 Bcf of injections last week bracketed perfectly the actual 85 Bcf figure released by the AGA last night. That figure also fell neatly in line with last year's 82 Bcf build.

What would it take to put the bulls back at the helm? A move above $2.30 insists Kennedy. However, he doesn't believe that is a likely scenario in the near future and thinks prices are susceptible to another move lower.

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