Tuesdays are oftentimes a day of small prices changes at the NewYork Mercantile Exchange, and this Tuesday proved to be noexception. The spot August contract settled unchanged at $2.365yesterday, as many traders reportedly remained on the sidelines inanticipation of the next AGA storage report to be released laterthis evening.
However, that’s not to say Tuesday saw no noteworthy tradingactivity. August fell to within half a cent of major technicalsupport at $2.32, but good buying at that point enabled thecontract to settle several cents higher.
One industry analyst expects the uncertainty to continue, withan overall pricing bias to the downside.” August remains fairlyoverbought on the daily chart. Now, many times an overbought marketcan continue to surge higher, but this time I don’t think so. Thecash market is acting like an anchor on futures prices right now,and in turn I think the storage surplus is acting somewhat like ananchor on cash prices. The more gas that remains in the groundmeans the better utilities are able to handle the hot weather,which is why prices haven’t gone berserk the last few weeks,” hesaid.
That storage surplus would be diminished if this year’s AGAreport falls below last year’s report of 96 Bcf, and the analystseems to think that it will. “We’re expecting a report more in therange of 65-85 Bcf. Most buying for the first few days of Julyseemed to be taken care of during bidweek for actual consumption,so we don’t think too much went into the ground,” he said.
But even if prices continue lower, and August breaks below$2.32, the analyst said to look for secondary support near $2.23.”Any fall below that would signal a drop below the 40 day movingaverage, and funds are likely to sell at that point, especiallysince they are now net long,” he added.
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