Feeding off gains notched Friday morning, natural gas futurespushed to fresh highs yesterday as funds and locals added to theirlong holdings. With that, the June contract has advanced 16 centsin the last two trading sessions to move past and settle above itsprevious life-of-contract high with a $3.216 closing price Monday.Estimated volume was light at 51,288 contracts despite theimpressive price move. An average trading day would see roughly20,000 more in estimated volume.

Heading into this week, traders were mixed as to whether themarket’s lack of sustained direction meant prices were ready for areversal or if the bull trend was simply in a holding pattern. AChicago marketer became a believer in the strength of the rallywhen the June contract punched through resistance in the 3.19-20area shortly after noon (EST) yesterday. “Cash was quiet. Theweather is benign. This is purely a technical rally. The funds arebehind this for sure.” And why not? Funds have fueled this rallywith a steady accumulation of long positions since the first of theyear. Since peaking out with a net short position during the secondweek in January, Funds have gradually decreased their shorts andincreased longs nearly 60,000 positions to a net long position of38,081 according to the most recent Commitments of Traders Reportreleased April 18. During that 4-month period, prices have climbedmore than a dollar from the $2.10s to the $3.10s.

For Cynthia Kase of New Mexico-based Kase and Company, however,the bull party has just begun. “Looks like the current correctionhas run its course and prices should trade to new highs… Firstresistance is $3.25, but odds favor a continuation to $3.31. Oncethe $3.31 level is touched, a major test could take place,” shewrote in KaseFax on Sunday April, 30.

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