Traders Look Both Ways for Market Insight
Like a bouncing ball, natural gas futures continued to chop
sideways yesterday as scale down buyers took advantage of low
prices afforded them by the market's dip Wednesday. The August
contract finished up 3.3 cents at $2.179, and in doing so continued
its five-day streak of alternating advances and losses.
No fresh news was seen to influence the market Thursday and as a
result traders were forced to glean what they could from old news.
Several traders agreed the American Gas Association storage report,
which said 59 Bcf was injected into storage last week, was a
supportive feature in the market. But while Ed Kennedy of
Miami-based Pioneer Futures does not believe the report necessarily
hurt the market, he also does not believe it played much of a
factor in the price advance. Instead, he points to aggressive scale
down industrial buying that entered the market in the low $2.10s as
a major reason for the market's strength. "It is no secret that
natural gas typically makes its yearly lows between mid-July and
mid-August. The market has found a very solid level of support at
$2.10 and every time August tries to break through that level the
volume of the buying picks up.
Does that mean we've seen our summer low? Possibly, says Kennedy
who warns that while we could still move lower, the weather might
come into picture again. "There are some models that call for a
ridge of high pressure to move into the East for end of July. It is
still too early to tell, but if that happens it would certainly
give the market a bullish push," he reasoned.
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