“The bear market is over, the bull market has begun.” That’s howone industry broker succinctly summarised the recent developmentsin the natural gas futures market yesterday. The July contractadded to its latest fortunes by climbing another 7.8 cents tosettle Monday at $2.362. In so doing, July is now “well above anypossible downtrend line you can realistically draw,” a source toldGPI.

Much of yesterday’s trading was simply an extension of the14-cent gain July posted on Friday, another source said. “Julystill had some work to do today, if for any other reason than thecontract settled above its 40-day moving average on Friday. That isa traditionally strong buy signal for funds, and it was even morestrong of a signal this time around considering how short fundsare,” he said. Friday’s Commitment of Traders report revealed thatas of Tuesday, June 16, non-commercials were net short by nearly35,000 contracts.

Strong fundamentals also are doing their part, with extreme heatthroughout the United States pushing June Henry Hub cash prices toeither side of $2.40. Considering temperatures are expected toincrease over the next 7-10 days, especially in the more heavilypopulated Midwest and Northeast, a marketer believes cash priceswill continue moving higher in the days ahead. Since the cash andfutures markets have now converged, he further expects cashstrength to escort the July futures contract above its immediateresistance level at $2.43. However, if July fails to move thathigh, look for more buying to hit the futures market in the upper$2.20s, he predicted.

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