After taking Tuesday’s small gain in stride, the bears were atit again yesterday pushing the August contract to test the bottomof a descending channel that has limited movement in the contractsince July 1. However, support held and light buying ensued pushingthe contract up to close at $2.231, down 3.5 cents for the day.

The relatively quiet trading day session left plenty of time fortraders to consider the release of the weekly AGA storage report.Market estimates weighed in between 65 and 90 Bcf in net injectionsas analysts factored in the strong physical demand that hasaccompanied above normal temperatures over much of the nation.However, “shocked” and “stunned” were words used to describe themagnitude of the refill upon its release. That report, showing anet injection of 93 Bcf, not only came in above all estimates butalso more importantly surpassed the 87 Bcf injection from a yearago. Furthermore, the string of injections eroding the year on yearstorage surplus was halted at 3 (see graph) leaving 1998 storage436 Bcf above 1997.

The report was met with immediate selling in the evening Accesssession pushing the spot month below support to $2.174. Withattention turning to today’s activity opinion is mixed as towhether August can sustain the downward momentum. A Dallas basedtrader remains bearish but doesn’t rule out the chance for aretracement higher before the market continues lower. “There arestill some short positions that need to be covered before thisthing turns down. I am a scale up seller on the next move up.”

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