Just when it appeared the May Nymex contract was in a positionto resume its upward ways, the contract duped hopeful bullishtraders by falling 4.2 cents to $2.479 Thursday. Perhaps moreimportant than the magnitude of the loss is that May failed to moveabove resistance at $2.56, and that the contract spent time belowits significant $2.465 level for a time Thursday before recoveringduring its final half hour of trading.
“Oftentimes, the market continues moving in the direction it didduring the half hour after most pipeline nominations, especially ifprices move above or below the range in which they had been tradingthat morning. Today, May traded between $2.53 and $2.56 for thefirst hour, hour and a half of trading, then plummeted right after11:30 (EDT). That got other locals on board, and they were able todrive May lower,” an analyst explained.
“From a pure technical standpoint, today was an outside day witha lower settle,” he continued. “That’s usually a bearish sign, soall other things being equal, I’d say May is poised to move backbelow $2.465 today, especially since you typically see positioncovering before the weekend, and there are still a fair number ofspeculative longs out there.”
A marketer noted cooler temperatures are being forecasted forthe Southwest this weekend, so the extra spot market buyingutilities in that region (particularly in Texas) will likely vanishtoday. These lower anticipated cash market prices could lendfurther selling pressure to the May contract, he concluded.
If May does indeed move lower, look for major support at $2.33,a technician said. He places resistance for May at yesterday’s$2.56 high.
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