Natural gas futures traders received a taste of both bearish andbullish news Monday, as the spot June contract turned in yetanother in a recent wave of volatile daily trading ranges. Thebears made their presence felt first after June easily fell belowthe double bottom trading formation in the $2.152-16 area toestablish a new low of $2.110. However, strong buying kicked in atthat point, and the June contract rode that momentum to settle theday up 5.5 cents at $2.257/MMBtu.
A marketer noted that futures traders have been bottom fishinglately, but their work may be done. “I can’t see prices droppingtoo much more. Either LDCs bought for themselves today, or a wholelot of marketers bought for them. This is a storage play. Utilitieswould be stupid not to lock in at least some of their 12 monthsupplies at these prices, considering prices are about as low asthey have been for more than a year. $2.10 seems like the sparkprice for utilities. That is, when futures drop toward that level,they spark into action,” he said.
However, he noted buying interest from those utilities startedto dry up as June approached the first of the month May Henry Hubindex (which GPI set at $2.26), so he expects June to remainrangebound “until fundamentals can convince the market otherwise.But that probably won’t happen until at least the second half ofthe month as we approach more air conditioning demand. A wildstorage report could do the trick, but without that, I’d say we’regoing to be limited to a 20-cent trading range for a while,” hesaid.
Now that June has nosed above technical resistance at $2.25,look for follow-through resistance at $2.30 and 2.355, a techniciantold GPI.
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