For about an hour yesterday it appeared as if the futures marketwas ready to break out of its recent rut. Feeding on emotiongathered in Monday’s active session, the April contract quicklymapped out a 7-cent trading range in only the first hour oftrading. But, that would be about all the market could handle andthe prompt month spent the rest of the session drifting aimlesslywithin that range. April finished down 0.5 cents to $1.696.
A Gulf Coast trader thinks the market can expect to see more ofwhat transpired early yesterday. “What we saw today was a surge andpullback by a market that wasn’t quite ready to add onto [Monday’s]gains. I suspect you’ll see this type of price action over and overagain for the rest of the heating season because both bulls andbears can make a strong case for the market to move in theirfavor.”
So will it be bullish technicals that will lift the markethigher or bearish longer-term fundamentals that will flush priceslower? “That is the $64,000 question,” another trader said. Andalthough he wouldn’t speculate as to the longer-lead direction ofthe market, he thought there was the possibility for buying aheadof the American Gas Association (AGA) storage report today. “Iexpect to see a 120-130 [Bcf] type withdrawal,” he estimated.
The Pegasus Econometric Group of New York agreed, and thinksthat with cold both behind and ahead, the market could move higher.”Although the current temperatures may not inspire much buying ofnatural gas, we think the market will worry enough over the AGAdata for last week and the weather forecast for next week to keepthe pressure on the shorts,” wrote Pegasus in its March 2, NaturalGas Report. They look for a withdrawal in the 80-110 Bcf range, butnote that anything above last year’s 47 Bcf pull will take a biteout of the year-on-year surplus. That surplus currently sits at 442Bcf.
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