The futures market moved quietly higher in fairly subduedtrading on Friday until a round of position squaring and freshbuying boosted the market before the close. That was enough topropel the September contract above its recent trading range tosettle at $1.877, a 6-cent advance on the day.

Sources noted there was no fresh news to blame for the”surprising” rise, but one trader was quick to point the market’sinability to break below long-term support last week as a technicalreason for the gain.

However, Friday did not pass by without giving the market sometidbit of fundamental data. Too late to affect trading, theCommodity Futures Trading Commission released its bi-weeklyCommitment of Traders Report on Friday. That report showed as ofAug. 11, the non-commercials segment of the market held a shortposition of 43,106, which comprises nearly 16% of the total openinterest.

Susannah Hardesty, president of Energy Research & Trading,Inc. of Greencastle, IN, was quick to point out not since thenon-commercials weighed in with shorts accounting for 17% of openinterest in early August of 1994 have they been so short. Lookingback to price action in the weeks following the Aug. 2, 1994report, we find the spot contract did manage to see a 15% move tothe upside, but it was only a temporary correction before pricesretraced those gains and then added another 15% loss to reach thesummer low, she said.

Hardesty feels this is a plausible script for the market tofollow in 1998. She looks for a breakout above $1.915 this week toconfirm the existence of the upward correction. “Once thecorrection is underway, $2.05 is my target for the Septembercontract.” However, Hardesty looks for the downtrend to take holdagain, sending the prompt month down “possibly as low as $1.60 forthe second summer low.”

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.