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July Fails to Test Resistance; Slips Lower
The July Nymex contract looked poised to build on gainsyesterday by opening strong then immediately testing resistance inthe $2.20-21 area. However, for the second day in a row resistanceheld, leading to profit taking that sent July spiraling down tosettle at $2.156, a 3.5-cent loss for the day.
Although technical trade has dominated July’s short reign asprompt month, a broker feels it will be underlying cash prices, notchart patterns, that dictate the market. “June cash prices havemoved comfortably above first of month levels. I would expect theaftermarket prices to remain buoyant above those bidweek levels.And as long as cash prices stay strong July futures will have ahard time trending below the June expiration price.” NGI’s HenryHub spot index for June was $2.02 and June futures expired at$2.017.
Looking ahead to the release of the AGA storage estimate todaymost industry estimates are calling for injections of 70-90 Bcf.Injections in that range would decrease the year-on-year storagesurplus. However, an analyst warns not to forget the effect of theMemorial Day weekend. The holiday weekend decreases physical demandwhich could boost storage injections despite the above normaltemperatures last week, he explained.
If the market continues lower look for support at $2.125 withresistance entrenched at $ 2.20-21.
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