The July Nymex futures contract crept up another 2.9 cents tosettle Tuesday at $2.391, as hot weather and subsequent strong cashmarket prices continued to support the futures strip. July reacheda high of $2.41 on the day, which is just 2 cents shy of its nextresistance level. However, one source feels the spot month may havetrouble breaking that level in regular trading today since heexpects many traders to stay on the sidelines in anticipation ofthe latest AGA storage report, to be released this evening.

On the other hand if last week was any indication, the marketwill continue rising with even a slight increase in the storagesurplus to last year. “This heat is intense and will be even moreso across the country later this week,” a marketer said. “Plus,temperatures are supposed to be hotter than normal for July andAugust, so there is now some additional demand to help flush outthe storage surplus,” he said.

And, don’t forget about the possible impact production shut-insrelated to hurricanes may have on storage. As reported in thearticle entitled Forecast: More Hurricanes Than Average Expected in’98, which appeared in Natural Gas Intelligence on June 23, thisyear’s Atlantic hurricane activity is predicted to be “appreciablymore than 1997 but less than the unusually active 1995 and 1996seasons.”

August futures trading also was particularly active yesterday,as that contract gained 4.5 cents to settle Tuesday at $2.438. Onebroker said he was “surprised to see August reach this level. Todaywas the third day in a row that funds bought above the 40-daymoving average. Usually, they do all their buying on the first day.Without that buying, I’m guessing August would have probably seen abit of a correction,” he predicted. That being said, without thesupport of speculators, he expects August to fall back into thelow-to-mid $2.30s before possibly heading higher.

©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.