Activity at the New York Mercantile Exchange resumed after thelong holiday weekend Monday, and apparently traders hit the marketwith one primary objective in mind: to sell. The spot Augustcontract opened at what turned out to be its daily high of $2.43,and ended up falling 7.4 cents to settle the day at $2.365. Anestimated 32,810 total contracts changed hands.

One Houston-based marketer said you can pin the loss on emergingweakness in the physical market. “We’ve had record breaking heatlately, and the best futures could do was reach the upper $2.40s.The jet stream is supposed to move more south by the end of theweek, so that means cooler temperatures. Storage is reasonablyfull. So if cash prices see no support today, which they’re notlikely to see, then the market will likely fall below indexlevels,” he said. GPI posted its July index for the Henry Hub at$2.37.

A source places immediate technical support for August at $2.32,but the Houston marketer feels “LDCs may bite at cash prices inthat area, but they’re looking to buy more in the $2.15-20 range.That gives the [futures] market some downward protection, butobviously the market has more room to fall,” he said.

August could also come under downward pressure from speculators.According to the latest Commitment of Traders report, as of June30, non-commercials were net long by 9,662 contracts. “That’screates that much more of a chance prices may continue to fall, orat least not shoot higher during the next few weeks, since thespeculators must eventually sell off those positions,” an analysttold GPI.

If August does break below its $2.32 support level, look forsecondary support at $2.25 and $2.205, a technician said. He placesresistance for August at $2.43 and $2.48.

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