Whether the cash market follows the futures screen or vice-versais the source of considerable conjecture and debate in the naturalgas market-almost on a daily basis. Although there have been timeswhen futures have been the driving force in the market, many feelthat cash prices, egged on by solid heating demand, have liftedfutures prices out of the doldrums this month.

Prior to yesterday’s trading the two markets sat neck-in-neck,with the Henry Hub average of $1.75 nestled up close to the April’s$1.748 settlement Wednesday. That prompted sources to contend thatthe market rested at a delicate crossroads yesterday. Would pricescontinue higher; and if so would the cash market continue to setthe trend? But the answer to that question was a resounding “no”yesterday. After the futures market received no early signal fromthe cash market, traders, armed only with technical analysis,deposited the prompt contract down 6.1 cents to finish at $1.687 onthe day.

But the bulls did not go without a fight. A Houston traderpointed to heavy congestion in the $1.757-784 area, which containedthe 18-, 20-, and 30-day moving averages, as a difficult hurdle forthe market to move past. “The market tested resistance right offthe bat [Thursday] morning, but the buyers ran into sellingpressure and the rout was on,” he said. However, he also felt thatsupport in the $1.64-66 area, backed by eager commercial buying,could limit further losses.

However, Sandy Trot, of New York-based Trot Trading Corporationtakes a more bearish slant. We saw everyone-funds, [speculators],and trade come out as sellers when [the market] hit $1.77.” Hecontinued by saying that if April is able to close below $1.70(which it did yesterday) then the market could be in for moresustained losses.

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