Natural gas futures seesawed to either side of unchanged only tofinish just a fraction of a cent higher yesterday as a late roundof fund buying retraced losses stemming from commercial and localselling earlier in the session.

July was the only loser, slipping 0.1 cents to finish at $3.235.Alternatively, the prompt June contract advanced 0.1 cents to closeat $3.217. Estimated volume was up over 10,000 from Monday, butstill relatively light with only 62,559 contracts changing hands.

Several sources contacted by NGI were surprised by the market’sinability to push higher after breaking six-month highs at $3.195Monday. In order to chart the last time the spot natural gasfutures contract was above the $3.20 level, one must go back toNovember of 1997 when the market was descending from a $3.85 peakreached during the last week of October.

Looking ahead, New York-based Pegasus Group is cautious aboutembracing the uptrend, which they feel is based more on marketsentiment and the flow of money rather than traditionalfundamentals. “The weather for this week features falling, andbelow normal heating demand, but rising cooling needs, which againleaves the option for bulls to spin the news their way,” Pegasuswrote in its Natural Gas Report May 2.

However, for Gerald Rafferty of New York-based Rafferty EnergyGroup, the up-trend is still solidly intact until the trend linethat describes the lower bound of the trend is broken to thedownside. “Anyone who’s bearish is doing so at one’s own peril.There is nothing out there to indicate a change in the trend,” hesaid. The upward sloping trend line to which he refers is drawn ona June daily chart and connects lows reached on Jan. 4 and Feb. 23.Currently that trend line offers support at about $3.00. On theupside, Rafferty targets the $3.30 level as the first level ofresistance followed by more technical selling likely at $3.50.

In order for prices to move higher, however, the market willfirst need to get past the weekly release of fresh storage newsWednesday. Based on heating and cooling degree day accumulationslast week, Pegasus is looking for that report to show a 20-40 Bcfinjection, “which might qualify as neutral relative to a 34 Bcfrefill a year ago.”

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