The June Nymex contract showed what hefty storage activity cando to the market by falling 7.7 cents to settle Thursday at $2.221The only good news for bulls is that the contract managed torebound after briefly falling below major support at the $2.160level. “The market has been wounded. People ignored the storagenumbers for too long, but they can’t ignore them anymore. The 345Bcf surplus is the largest we’ve had this year, and we’ve had fourstraight weeks where we’ve added to that surplus,” an analyst toldGPI.

If one industry broker is correct, lower prices may dominate NewYork Mercantile Exchange trading for some time. “The latestCommitment of Traders report should have given strong evidence thatthe market was going to fall. I’m guessing open long positions ofspeculators were still at 25,000 or so coming into this week, sothey had a lot to sell, he said.

That may have been a temporary market condition, but he arguesmore long term factors may keep June futures lower. “Now we’re at athirty day window where fundamentals aren’t strong enough tomaterialize yet. By July it may be another story, but right now,cash prices probably won’t get much support unless it comes fromincreased storage demand. But that will have a dual effect. Peoplewill inject more now because they think the long term price view ishigher, but while that will drive short term prices higher, it willmost likely take away from long term demand, thus driving summermonths lower. If cash prices fail to move above $2.30, Nymex pricesare going to flounder,” he predicted.

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