Amid stronger cash market prices and another round of blackoutsin California, natural gas prices finished on a positive note forthe third session in a row Monday, as traders covered shorts in anotherwise quiet day. April finished 2.8 cents better at $5.063.

The bulls drew first blood yesterday by propelling April futuresto a gap higher open, when the regular open outcry session begantrading at 9:30 a.m. (EST). However, the rally proved to beshort-lived. After nudging prices higher to notch a $5.17 high, thebulls watched their handiwork eroded by a steady stream of sellingthroughout the morning. For the rest of the session, the market wasalmost in balance as prices checked within a couple pennies ofunchanged.

The relatively dull price action yesterday afternoon gavetraders the opportunity to weigh in on what they think might be thenext leg for prices. While there still appear to be more bulls thanbears in the market, the bulls may be losing their swagger.

Admitting that the bounce off last week’s $4.87 low wasconstructive, Cynthia Kase of New Mexico-based Kase and Co.believes it is still premature to say the market will return to abullish trend right away. “The key will be the extent to which theprices bounce,” she wrote in her weekly Commentary on Gas. “Thehigher prices retrace, the more well supported the market will be.So the key to determining market direction in the coming days willbe to monitor the level to which prices bounce.

“If there is not much of a continuation higher and prices holdeither of the first two resistance levels of $5.105 and $5.155,then odds are good for a penetration of the current low and a breakof the $4.80s.”

As of last night, the $5.105 level was in jeopardy, as pricesspiraled higher in overnight Access trading. As of 7:00 p.m. (EST)last night, the April contract was up 5.2 cents at $5.115.

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