Gains

After gapping 4 cents lower on the open Thursday, the May HenryHub futures contract quickly prompted eager buying as locals andfunds jumped in to take advantage of the downturn. The contractjumped all the way to a new three-month high of $2.090 beforeprofit-taking triggered a sharp retracement. May ended Thursday’sregular session up 2.5 cents from Wednesday’s close.

Feeding off late gains notched by the expiring April contractMonday, May kicked off its campaign as the spot month at Nymexyesterday by continuing higher in active trading. And whereas Aprilcontract made its mark in a late short squeeze, May was promptedhigher throughout the day by a steady stream of commercial andspeculative buying. Several sources also pointed to buy-stoporders, which were triggered as the market moved through the$1.93-95 range as a reason for the strength. May finished up 9.5cents at $1.978.

With little in the way of fundamental support to speak of, cashprices still managed gains between a nickel and a dime Tuesday atalmost every trading point. “It’s got to be technical,” said autility buyer. The tone was set by the screen opening around $1.80,a dime higher than Monday’s opening, even though the April contracteventually ended the day with a small net loss, he said. Anothersource thought it was a case of cash starting to converge with thescreen.

The strong corrective rebound of the April contract seemed indanger of coming to an end yesterday morning when the contract setnew lows for the week at $1.835, but April held and quickly resumedits upward path in afternoon trade to post a new high at $1.930 andclose the day at $1.928/MMBtu.

The cash market continued to eke out small gains Tuesday inquiet activity that was starting to remind some of last month’sgeneral lack of volatility. New averages ranged from flat to abouta nickel higher, with the varying increases scattered throughoutthe producing and market areas.

Cash numbers ranged from flat to just over a nickel higher at afew points Thursday, and sources were nearly unanimous inattributing the upticks mostly to the example set by the Henry Hubfutures contract. In turn, they thought the screen strength derivedfrom the fairly hefty 203 Bcf figure in AGA’s Wednesday afternoonreport on storage withdrawals last week.

Adding to gains achieved during the Wednesday evening Accesstrading session, the futures market picked up momentum yesterdayamid moderate short-covering activity. The February contractfinished up 6.5 cents to $1.892 and in doing so not only settled inthe top half of its daily range, but also near the important $1.91resistance level.

Despite a dearth of fundamental support, the cash market sawmostly minor gains Wednesday. The firmness came as a surprise tomany who couldn’t understand where the demand was coming from. Aminuscule gain in Henry Hub futures didn’t give cash much impetusat all, one trader said.

For the second day in row Wednesday, natural gas futures werelimited to small gains amid a quiet trading session. The Februarycontract finished up a penny at $1.827 in the regular tradingsession.