The July futures contract was nudged lower again yesterday butnot before bulls attempted to push the market higher early in thetrading session. July reached a high of $2.03 just before 1:00 P.M.EST. only to be beaten back to settle at $1.938, down 3.8 cents forthe day. By dipping into the low $1.90s the spot contract traded atits lowest point since April 1997.
Lack of strong follow-through selling Monday following Julybreaking long term support at $1.97 fueled the rally yesterday,sources agreed. The gains were short-lived when overhead resistanceat $2.03 held, sending the contract spiraling down in an activeafternoon trading session. Estimated volume was 85,886.
As is normally the case on Tuesday, traders started toanticipate the release of the weekly AGA storage report. Injectionexpectations were in the 90-110 Bcf range for the week ending June5th. A refill that size could do what few analysts were expecting afew short weeks ago: Continue to increase the year-on-year storagesurplus. This time last year saw four straight injections in the90’s. The industry managed to eclipse the first one last week bystuffing 106 Bcf into the ground. This week most people feel theindustry will better the 91 Bcf figure from a year ago.
A Chicago trader feels it won’t be much longer until we hit thebottom. However, he certainly isn’t looking for a strong reboundanytime soon. “This will continue to be a sell-the-rallies market.We saw that today and I think we will continue to at least untilthe economic and fundamental picture improves. Even if it gets realhot or a storm starts brewing later in the summer, this market willfind significant impediments to moving higher for an extendedperiod of time”
Now that support at $1.97 has been erased, the next downsideobjective becomes the bottom of the downtrend channel at $1.91.Resistance stands at $2.03 to limit the upside, a chartist advised.
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