The June Nymex contract slipped 4.2 cents to $2.215 on Tuesday,thanks to what one analyst said was intraday selling off technicalresistance at $2.26. Total estimated volume came in at 39,705contracts. “Cash started to rally, so futures have pretty muchconverged with cash. The market is being very cautious, after thebreak last week,” a broker told Daily GPI.

Now that the two markets have converged, the broker expects spotprices to take more of a leadership role in deriving futuresprices. However, he thinks technicals still have the potential todirect the market on their own. “Funds are still short, so theywill be in a buying mode eventually, despite what happens with cashprices.” He thinks June has an upside objective of $2.32-35, basedon the charts.

One analyst could not pinpoint a potential high, but he believeshe has pegged the June contract’s potential downside risk. “I haveno idea where the high is, but we’ve probably established a low.There has been extremely strong buying interest every time we’vedipped below $2.15, so I think you’ll see $2.11 stand as the lowfor the month,” he said.

Of course, the market could see another downward jolt eitherthis evening and/or on Thursday, if tonight’s AGA storage reportcomes in above expectations. Several sources are calling for areport between 50-75 Bcf worth of injections, but even a reportwithin this range would add to the year-on-year storage surplus.”The last several weeks saw futures prices tumble because thereport was higher than it was last year, and considering lastyear’s report was only 46 Bcf (worth of injections), it’s likely totop that number again,” another analyst said.

If June does move lower, look for immediate support in the$2.17-18 area, the aforementioned broker said. Resistance remainsat $2.26.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.