It has been a good spring for bull traders at Nymex. SinceFebruary 26, the now-spot June contract has rallied nearly 70 centsto trade as high as $2.40 last week. But just as constructivetechnicals and low storage injection figures seemed to point tocontinued strength, the market spiraled lower Thursday and Friday.And while long liquidation spurred by the bearish one-two combo ofnuclear units coming back on line and moderating temperaturesacross the country were as good as reasons as any for the marketturning lower, traders remain divided as to the price directionheading into the summer. June finished the week mixed at $2.273, 2pennies above its close from the prior Friday, but 2.2 cents lowerfor the day.

A Chicago marketer was surprised by the market’s ability totrend lower into the weekend, despite the low storage injection.However, he feels that the real test will come this week, when therefill will be compared to the 100 Bcf seen last year. “I look foranother small number-maybe 40 or 50 Bcf-to really put the wheels inmotion. It will be hard for the market to continue lower if wecan’t inject even half as much gas as we did last year.”

However, Tom Saal of Miami-based Pioneer Futures takes theopposing view on the storage situation. Increased pipeline capacityto Midwest, he argues, has diminished somewhat the need for storagesupplies as a safety net. “What it means there is not as great anecessity for people to buy gas today for future use. Thattranslates into less demand for storage injection gas this summer.”He added that the decrease in demand should help to offset, atleast in part, the expected decreases in deliverability, which someanalysts predict will be on the order of 3-5%.

Looking ahead, Wednesday’s storage report will not be the onlymarket data talked about this week when market participants meet inDallas for the annual industry trade show. Growing long positionsheld by non-commercial traders as evidenced by Friday’s Commitmentsof Traders report (see table) will undoubtedly be a hot topic. TheCommodity Futures Trading Comission (CFTC) reported thatnon-commercial traders or “speculators” had increased their netlong holdings to a record 48,029. Because non-commercial traderscannot take delivery, market watchers are begining to wonder whenand how fast they will sell-off those long positions.

In order for June to move much lower, it will need to breakbelow support at $2.205, a chartist said. Resistance hangs at priorhighs of $2.405, he added.

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