Bullish

The bullish sentiment for the aftermarket that several tradershad expressed Tuesday (see Daily GPI, July 1) appeared to bejustified Wednesday as price increases of a dime or more dominatedmost points. The old refrain of “following the screen” was popularagain. But as the screen leads up, so shall it also lead back down,according to some prophecies, and so it was Wednesday. Early pricelevels were retreating late as Henry Hub futures gave up earlygains. Henry Hub cash started at $2.48-49 but fell as low as $2.40late, a marketer said.

Traders who hadn’t finished already wound up their July bidweekbusiness Tuesday and started looking for clues on aftermarketdirection. What they found in swing deals done for today only was amixed bag of flat to up or down slightly from bidweek levels. Butmany sources are expecting an overall strong aftermarket. There maybe some initial softness since the July Fourth holiday weekend isconsidered the lowest demand period of the year. But sources lookfor fundamental cooling load to support gas prices after that.

ÿBetter late than never, bullish traders must have thought onTuesday. After posting a extremely light trading session on Monday,the spot August Nymex futures contract exploded 8.0 cents higher tosettle Tuesday at $2.469. The contract managed to hit a high of$2.485 amid a session when a robust 52,644 estimated totalcontracts changed hands.

Natural gas futures traders received a taste of both bearish andbullish news Monday, as the spot June contract turned in yetanother in a recent wave of volatile daily trading ranges. Thebears made their presence felt first after June easily fell belowthe double bottom trading formation in the $2.152-16 area toestablish a new low of $2.110. However, strong buying kicked in atthat point, and the June contract rode that momentum to settle theday up 5.5 cents at $2.257/MMBtu.

If bullish natural gas futures traders became excited when theMay contract moved above the $2.70 mark yesterday morning, theirenthusiasm was tempered following the spot month’s daily close of$2.689. Although this represents a daily gain of 2.1 cents, onetrader is concerned that futures prices will be falling in the daysto come. “I was hoping a break above $2.70 would lead to a move to$2.80, but traders seemed pretty quick to slam the door. It lookslike profit taking has started ahead of the long holiday weekend,”he said. The New York Mercantile Exchange will be closed for GoodFriday.

Cash prices returned to a climbing mode Friday, and in theprocess won more converts to believing in a fundamentally stronggas market this spring and summer. Although Western gains tended tolag a bit behind, most increases were between a nickel and a dime.Most of the double-digit gains occurred in the Gulf Coast,Appalachian and Northeast market areas.

The recent surge in natural gas futures prices became so greaton Monday that the spot April contract came within 4 cents ofreaching its all-time high trade of $2.460. However, speculatorswere quick to “pounce on a selling opportunity” at that price, theresult of which left April up just 0.8 cents for the day at $2.351.Total volume was estimated at 88,053 contracts.