The May Nymex contract took time out to lick its wounds Tuesdayby gaining 2.2 cents to settle the day at $2.501. Several longtraders were concerned that May would add to its massive 17.8 centloss turned in on Monday, but good buying from the outset kept Mayat either side of $2.50 throughout the session.
An analyst believes May probably didn t have much more room tofall, at least in the near term. Probably the biggest reason whyMay didn t fall any further is that many speculators got out onMonday. Total open interest fell by almost 22,000 contracts fromFriday to Monday. Considering speculators were net long more than33,000 contracts a week ago, this suggests many of those openpositions have been covered. Without that selling pressure, Mayprobably isn t going to venture too far downward, he said.
Adding to his belief is the fact that current cash marketprices in the Gulf are several cents below the current May futuresprice. May should be trading at a 5 to 10 cent premium to (April)cash prices, so I expect May to continue to claw back upward in thedays to come, he concluded.
For May to travel much higher, however, it will first have toclose above major resistance in the $2.52-54 area, a techniciantold GPI.
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