The July contract closed out the week on a positive note aslight short-covering and position squaring bolstered the market6.5-cents to settle at $2.035 on Friday. July was not the only bigwinner, with nearby August also coming to life. August was up 7.3cents bringing the 12-month strip to $2.329.

Now the attention shifts to whether last week’s strength is aprecursor of things to come or just a temporary blip in anotherwise down-market. A Miami-based broker does not rule out thepossibility of another attempt at a new bottom but admitsThursday’s and Friday’s price action looks promising. “Weregistered higher highs and higher lows both days and that is veryconstructive, but we will need a move to the $2.13-15 area toconfirm the reversal of the downtrend.”

Susannah Hardesty, president of Energy Research & TradingInc. of Greencastle, IN, agrees but feels the market will need toconsolidate for a period before moving higher. “We are in a bit ofa lull before the storm. I look for a wide trading band leading upto a move to the $2.25-35 area to reach our final spring high.”Hardesty, whose trading regimen is based on a series of spring andfall highs between summer and winter lows, anticipates this latespring high will come sometime in the middle of July, which wouldaffect the August contract. Although she bases this prediction on anumber of technical and fundamental factors, the bi-weekly CFTCCommitment of Traders report undoubtedly plays a big part in heranalysis. Although the next report will not be available until thisFriday, the report covering the two weeks ending June 2 containssome bullish data. In that report the noncommercial traders’ longpositions only constituted 2.6% of open interest. Historically,when those speculative longs dwindle to less than 3% the market hasmoved higher within the next 8 weeks. Conversely when thenoncommercial longs reach 17% the market is in store for a retreat,she advised.

If the contract can continue to move higher, July will faceresistance in the $2.07-10 area ahead of the $2.20-235 level.

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