In what has become almost a routine, natural gas futures coastedto another sizeable gain Friday as traders bid up the June contractin an expiration-day buying frenzy. With no fresh news in which tosink their teeth, traders were content to chew on concerns thatstorage is growing at too slow a pace to match predicted demandlevels, both this summer and next winter as reasons for the rally.Becoming the first contract to post a final settlement above $4.00,the June contract notched an impressive 17-cent gain to settle at$4.406 after peaking at $4.50 during a volatile final 30 minutes oftrading.

As expected, heavy market-on-close buying seen Wednesday andThursday gave way to MOC selling Friday. The June contract droopedback to almost unchanged at the close after trading as much as 27cents above Thursday’s close. However, because the final settlementis calculated by averaging all the trades during the last 30minutes rather than only the last 2 minutes as on any other day, itwas almost unaffected by the late sell-off.

Looking ahead, traders are mixed as to which direction the Julycontract will take when it becomes the prompt month Tuesdaymorning. While some believe the prices will make a quick correctionlower, virtually everyone polled Friday by NGI expects prices toeventually take out the all-time high of $4.60.

“I think we will [set a new high] at 2:15 (p.m. EDT) Wednesday,”predicted a Northeast trader. “We have seen a string of bullish AGAfigures, and I don’t expect this one to be any different.”

She may have a point, because the weekly release of freshstorage data at 2:00 p.m. has spurred some intense buying over thepast several weeks. On Wednesday, May 10 the market advanced 13.4cents on the heels of a less-than-expected 58 Bcf injection. A weeklater the AGA played another sweet tune to bulls’ ears byannouncing only 46 Bcf was injected the previous week. And thenagain last week, just as traders were beginning to wonder how muchhigher the market could advance, AGA announced another low — 55Bcf — injection. Bulls wasted no time pressing the June contract25.9 cents higher in just an hour.

However, a Chicago trader wonders if the market will even waitfor fresh supply data before testing the $4.60 level. “Despitecoming off hard at the close today, July was already well bid inthe over-the-counter market (Friday afternoon), he observed. “Afterclosing at $4.268, July quickly traded at 4.28-29 OTC. Then asomeone took out a $4.31 offer and the market was off to theraces,” As of 3:00 p.m. July was offered at $4.35 in OTC dealings,he said.

Acknowledging that storage injections are guilty until proveninnocent, the New York-based Pegasus Group looks forward to theWednesday report. “This faith will undergo a fresh evaluation onWednesday when the weather forecasts for [last] week suggest that afigure quite comparable to the 71 Bcf injection from last year ispossible. A neutral figure might not be that great a test, althoughas overbought as this market has become, it’s hard to rule out anadverse price reaction even for a figure which is deemedinsufficiently bullish to keep this market climbing at itscustomary 50-cent per week clip,” the group wrote in its NatGasReport Friday.

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