Follow-through buying took hold of Nymex trading early, and ledto new session highs before the closing bell last Friday as Julygained 9.9 cents to settle at $2.17. July gapped higher on the openafter coming into the day with solid momentum following Thursday’smodest gains in both the regular and ACCESS trading session. Julyopened at 2.115 Friday, already 4.4 cents above Thursday’s settle.A warming trend for both the weekend and extending into the 6-10day forecast in the South, coupled with some technical momentumwere universally cited as reasons for the strength.

With Texas poised for the first triple digit heat of the seasonover the weekend cash prices snapped to attention early Friday.”Today was purely a case of a physical squeeze. Just not enoughmolecules of gas to meet demand. Both May and June cash pricesreacted accordingly with June Henry Hub values topping out at 2.15.By the time futures opened it was a foregone conclusion the frontmonths needed to move to stay in step with cash. The only thingleft to answer was how far how fast would July rally.” a Houstontrader said.

However, fundamental factors were not entirely to blame for themove. Chartists have been watching a possible W bottom formation,featuring lows for the July contract made on May 22 and May 27 of$2.030 and $2.035 respectively. Today’s move confirmed theformation. In addition, July was able to at least temporarily freeitself of the steep sloping downtrend channel which has confinedthe contract since April 8th. “$2.125 was a tough hurdle for Julytoday. We saw some selling develop in that area, but once abovethat level July was free to trend to $2.175.

In daily technicals support exists at the bottom of the gap at$2.085 followed by the aforementioned $2.03-035 level. Resistanceis clustered in the $2.20-21 area.

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