$2.40 gas proved to be too much for July on Wednesday, as thespot futures contract fell 5.5 cents to settle the day at $2.336.July opened at $2.41, but that turned out to be its high trade forthe day as sellers were quick to liquidate positions and takeprofits ahead of the contract’s expiration this Friday.
July continued to slide during Access trading, even though thelatest AGA storage report of 82 Bcf is 15 Bcf lower than the reportfor the same period last year. In addition, temperatures also seemto support higher prices. One meteorologist predicts temperaturesin the Midcontinent and the Southwest will be much above normalthrough at least July 3rd. As a result, a Tulsa based marketernoted, “the electrics are buying all the gas they can get and theydon’t care what it costs.”
Cash market prices at the Henry Hub are currently at either sideof $2.40, and a marketer expects strong air conditioning demand tokeep those prices at that level. For that reason, he expects theJuly futures contract to rise to converge with the cash market.
If these factors do translate into higher prices, look forresistance for July to kick in at $2.43, a technician said. Heplaces support for July in the $2.28-29 area.
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