If you can’t beat them, join them. After watching prices bubble higher last week, commercial and fund traders jumped in on the buy-side Monday to drive the natural gas futures market to new two-month highs.

After gapping higher at the opening bell, June received the biggest buying boost of any contract, trading up to $6.10. At that point selling entered the fray, dropping the prompt month back below the psychologically important $6.00 level. It closed at $5.983, up 17.7 cents for the session, but 11.7 off its spike high for the session.

Traders were quick to point to last week’s 55-cent run-up as the groundwork for Monday’s rally. By closing at $5.806 Friday, the June contract was perched within striking distance of its April 21 high of $5.91. For Stephen Smith Energy Associates, last week gave the market the “ideal spring combination of cold weather in the Northeast and West along with very warm weather in the Southeast and Southwest.” SSEA continued, pointing out that the storage deficit has not narrowed over the past 11 weeks, resulting in a more formidable “summer build task,” should the market hope to reach historical levels by November 1.

As it turns out, however, the gains last week were a set-up for the real price fireworks seen Monday. With a $5.92 opening print, June not only exceeded its three-week high at $5.91, it gapped above it. Within 20 minutes, the prompt contract had risen to its $6.10 high for the day. A rally in the nearby crude oil pit lent support to the natural gas price spike. Although it finished lower on the day, June crude extended to a new three-week high at $28.45 Monday morning.

Looking ahead, most traders — both scholars of technical and fundamental analysis look for higher prices. Almost any way you slice the storage numbers, the data suggests injections need to ratchet higher in order for the market to reach some semblance of full. Meanwhile, Elliot wave analysis has targets at $6.58 and $7.15.

One of the holdouts remains Tim Evans of IFR Pegasus in New York, who takes the glass is half full approach to storage data. “Having seen the actual, heating and cooling degree day accumulations for last week, we’re trimming our estimate for Thursday’s DOE storage report to 75-85 Bcf, quite similar to last week’s 80 Bcf tally. The result will be about the same, but with slightly less heating demand and a bit more consumption on the cooling side. Comparisons would remain neutral-bearish, relative to a 62 Bcf build from last year and the 75 Bcf five-year average tally. As with last week’s figures, this won’t confirm the short-term price rally we’ve been seeing,” he wrote in a note to customers Monday.

In an attempt to take advantage of the expected price downdraft, Evans will use a $5.78 sell stop to initiate a 50% short position in June futures. A buy stop at $5.92 would limit his risk once short.

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