The July Nymex contract started the week right where it left offlast Friday by probing 2.1 cents higher to settle at $2.191yesterday. After trading higher into the closing bell last Fridaythe market opened lower on Monday, briefly tested short-termsupport, then managed to retrace back up near overhead resistanceat $2.20-21. Estimated volume was a healthy 56,566 contracts.
A technical rally with fundamental underpinnings is howSusannah Hardesty, President of Energy Research & Trading, Inc.of Greencastle, IN, describes this market. “The first five tradingdays after the June expiration were crucial to this market’sdirection. A move 3.5 cents either up or down would confirm with85% confidence the continuation or the reversal of the downtrend.Therefore we are looking for a second spring high between $2.375and $2.575 on or before June 15th.” Furthermore she said privateforecasts calling for high variability of temperatures during Junecould firm up expectations of a warmer summer.
The Pegasus Econometric Group thinks we could be in for a periodof follow-through before the downtrend resumes. In the Natural GasReport on 6/1/98 the group said, “It’s not that the uptrend in theyear-on-year storage surplus has become irrelevant, but after eightconsecutive increases it has lost the power to attract additionalselling. Longer-term there is still plenty of downside potential,but it won’t be realized until some of the shorts have been drivenfrom the field.” Technicians and chartists agree July resistanceexists at $2.20-21 and then at $2.30-33. Support lies at $2.125.
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