Following last Friday’s near price-stalemate, bears were quickout of the blocks yesterday, and within the first hour of tradingthe June contract reached it’s lowest level since April 19. Themarket received a slight buying boost before the noon hour, butsellers were at it again yesterday afternoon, carving out a $2.145low in choppy trading activity. The June contract finished at$2.176, down 4.9 cents for the session.
Sources felt yesterday’s price erosion was a combination ofcontinued technical weakness mixed with a rapidly deterioratingfundamental picture. “There was nothing positive to look at today,one commercial trader lamented. “Nukes keep coming back up andthere is very little electric demand in the Ohio Valley orNortheast. Texas is hot, but we can’t carry the market byourselves.” He also said storage buying, which supported physicalprices during the first 20 days of May, is almost non-existent now.
Looking ahead, Tim Evans of New York-based Pegasus EconometricGroup believes that the market’s recent losses might be moreserious than just a pre-expiration sell-off. July, he argued, couldbe dealt a blow to its self-esteem just minutes after June iscleared off the board Wednesday when the American Gas Associationstorage report is released. “An injection of more than 100 Bcfwould be a real slap on the nose for this market.” While Evans doesnot rule out the possibility of a triple-digit build, he feels thata refill on the order of 80-100 Bcf is more likely. The comparablefigure for last year is 92 Bcf.
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