After spiraling down in the last 30 minutes of last Thursday’sabbreviated trading session, the spot January contract gapped lowerand traded in a tight 6-cent trading range Monday as traderscontinued to test the downside of the market. The nearby cashmarket, which was trading 5-10 cents lower on many pipes, had anundeniable affect when the futures market opened at 10 AM EST,traders said. Estimated volume was robust, with 86,466 contractschanging hands.

But lower cash prices were not the sole factor for Monday’sprice weakness. Sources said technical factors, which remainnegative, gave local traders a reason to sell into the price move.

Looking ahead to the expiration of the January contract today,opinion is mixed as to whether prices will continue lower or bounceback in a last day short covering rally. A Gulf marketer firmlybacks the former scenario, and thinks any rally in prices will notcome until after this weekend. “I look for prices to resemble acheck mark-down first, then up in an corrective rally. Based onthat I look for the market to continue lower [today] with asettlement coming in the $1.65-68 area,” he said.

Ed Kennedy of Miami-based Pioneer Futures shares his view in thelong run, but looks for a stronger cash market to lead the way forhigher futures tomorrow. “Like [Monday], the futures market will bea creature of the cash market [Tuesday]. I look for a Januarysettlement in the $1.85 area.”

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