Perched

With little in the way of technical or fundamental news, naturalgas futures were held to an extremely-tight, 4-cent range in quiettrade yesterday. By finishing at $2.949, the May contract was just0.1 cents below its opening price and 2.2 cents lower for the day.Estimated volume was thin, with only 31,720 contracts changinghands.

Perched at recent highs and just below contract resistance at$2.19, the May contract was poised to continue higher yesterday.And after opening at $2.17 local buying pushed prices to $2.189 inchoppy trading. But despite the bullish euphoria the market hadbefore the open, locals received little help from other marketsegments early yesterday and were forced to cover their longpositions Tuesday afternoon. The resultant sell-off left the promptmonth down 2.5 cents to $2.144.

The futures market was perched at a precarious position cominginto trading Monday. Last week’s precipitous decline had positionedthe spot February contract near its all-time low of $1.77, leavingsome traders to suggest that Monday’s price action could dictatethe course of trading for the rest of the week. A move below $1.77could open the door for fresh selling, while a rebound above $1.77might prompt short covering. And although Monday’s move below the$1.77 level did not entice the cascade of selling some expected, itdid signify that the bears are not finished yet. February endeddown 5.1 cents to $1.779 after trading to a $1.74 low.