The March Nymex futures contract fell another 1.9 cents to$2.198 Friday, as traders continued the falloff in prices theystarted on Thursday. “This was not a case of traders gunning forstops, where they try to push the contract under support hoping thecontract will fall even more. This was simply an extension ofThursday,” a broker said.
Traders continue to point to warm weather and a growing storagesurplus as the main reasons March has been unable to sustain a moveabove $2.30, However, Tom Saal, a broker with Pioneer Futures inMiami, summarized the storage situation this way: “the summermonths are near the weighted average cost of gas in storage. Ifpeople are simply planning on rolling that gas over into summer,then the gas in the ground now is really not discretionary.Therefore, as long as people keep withdrawing, that should helpkeep cash prices up. The market is getting shorter by the day,” heexplained.
In addition, the market may be in for some technical support aswell. “The outmonths are forming classic bull flags,” Saal toldGPI. “These flags in general range from about $2.10-40, so I’dguess any breakout could move to $2.60 or so. I’m not sure what itwill take to get it up there, but all we may need is some weatherchanges. Two or three days of a low jet stream may be enough to jarcash prices higher,” he said.
If March does manage to break above resistance at $2.29-30, lookfor the contract to try to fill in the chart gap in the $2.32-35area, a technician said.
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