A casual glance at the futures table — its narrow trading rangeand its small daily change — would lead one to believe Wednesdaywas a relatively quiet expiration day at Nymex, during which theAugust contract was ushered off the board at $1.942. ButWednesday’s trading was anything but ordinary. Traders wereinundated by a host of technical and fundamental factors, leadingto “very choppy” trading and heavy volume of 116,428.
After a strong opening, the August contract moved higher on lastminute position squaring and some “hurricane hype,” an analystsaid. Although tropical storm Alex has not reached hurricane statusyet, sources felt it was enough to discourage the market frominitiating fresh short positions. That helped to lift the marketabove $2.00 before trade selling pushed prices down in theafternoon.
Shortly after the market closed, traders were hit with theweekly AGA storage report, showing a net injection of 66 Bcf, whichwas enough to better the 60 Bcf reported this week last year. Thefigure came in at the low end of the 65-75 Bcf market expectation.That proved to be bullish enough to propel September up 2.2 centsto $1.955 in the evening Access session.
Looking ahead to September’s debut as prompt month this morning,Tim Evans of the Pegasus Econometric Group feels the recent tradingrange, bounded by $2.04 and $1.89, will serve as short-termresistance and support, respectively. Evans remains bearish onfundamentals in the intermediate to long term. The storage surpluscontinues to be very worrisome going into the shoulder months, hesaid. Last year, storage topped out at about 2,800 Bcf and thecurrent surplus of 463 Bcf compared to last year shows little signof eroding. The estimated full volume is 3,190 Bcf.
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