Short-Covering Boosts Futures, Bulls Confidence
Natural gas futures made it three in a row yesterday when a
combination of commercial short covering and local buy-stop hunting
boosted the contract to its highest level since last week. In doing
so, the prompt contract was able to fill in a chart gap created
between Friday's $2.283 low and Monday's $2.26 high. July finished
at $2.295, up 3.1 on the day.
Traders were surprised by the market's ability to move higher in
the face of neutral fundamental factors and bearish technicals. The
July contract has been in a reversal since notching a $2.48 high on
June 7. However, a California trader feels bulls can glean
something positive from a market "that has made higher highs and
higher lows" each day since Monday.
"Relatively quiet," is how Tom Saal of Miami-based Pioneer
Futures viewed trading on Thursday. However, he admitted that
activity picked up once trade buying was able to poke through the
$2.285 level. Looking ahead, Saal believes this market is very
balanced right now. "We might trend slightly higher or lower into
Monday's expiration, but I do not expect the market will make a
major move until after July is off the board," he said.
For what its worth, natural gas futures have posted gains each
of the last six Fridays.
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