The natural gas futures market continued its stunning price ascent Wednesday as local and fund traders exerted their will on a market notably devoid of sellers. After two failed attempts to sell-off during the first four hours of trading, the May contract exploded 17 cents in 90 minutes to notch a new all-time May 2004 contract high at $5.95. It settled just off that level, up 18.7 cents at $5.933.

Crude oil, which has been commonly pointed to as a bullish factor for the natural gas market over the past couple months, turned against its hydrocarbon brethren Wednesday. Pressured by the bearish news released Wednesday revealing a hefty 5.7 million barrels were added to US crude oil inventories last week, the May crude oil sloughed 49 cents during the trading session to close at $35.76.

However, after head-faking lower in sympathy with crude, natural gas was quickly bid back up Wednesday by speculative traders looking to test the market’s upside potential. After finding little resistance in pushing the market back up into the mid $5.70s, locals set their sights on the contract high at $5.83, noted Tom Saal of Commercial Brokerage in Miami.

“[Local traders] knew there would be buy stops above contract highs,” said Saal, who pointed to the reality that everyone short is automatically in a losing position when a contract makes new highs. “There were buy stops up there [placed] by people looking to avoid additional margin calls on their shorts.”

Looking ahead, Saal believes the market is in a bit of a quandary. While it has moved higher amid seemingly boundless buying over the past two days, Saal is quick to point to considerable resistance looming just ahead. “You have new May high at $5.95, psychological resistance at $6.00 and several important Fibonacci retracements at $6.01 and $6.10.”

However for Saal, the real key to picking a top is to determine at what level producers consider sufficient to add to their hedges. For the answer to the question, Saal takes a look back at the last year of trading in which prices bottomed and peaked at $4.39 and $7.55 respectively.

“If you take the midpoint of $4.50 and $7.50, you get $6.00. Why would a producer whose mantra is that we are running out of supply want to sell below the midpoint of the trading range over the last year? This market is looking for sellers and it will likely keep going higher until it finds them,” he continued.

Looking ahead to fresh storage data to be released Thursday morning, market watchers are poised for a 10-30 Bcf draw. If realized, a number of that magnitude would be somewhat open to interpretation.

While falling bearishly short of the 65 Bcf decrease notched in the previous week’s figures, a twenty-something withdraw would contrast bullishly versus the year-ago release featuring a 36 Bcf build. Stacked up against the EIA five-year average draw of 26 Bcf, a number in the 10-30 Bcf expected range would produce little or no change in the 68 Bcf deficit.

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