Fueled by strong cash prices, a constructive technical picture,and lingering storm concerns the natural gas futures market wasquick out of the gates yesterday as traders lifted the market toits highest point in over a month. However, the buying pressuredropped off as November prices crossed the $3.00 threshold, whichprompted participants to trim gains into the close. After notchinga $3.03 high, the November contract finished at $2.97, a 4.3-centadvance on the day.

Several traders contacted by NGI Wednesday said that a robustcash market backed by bullish fundamentals is at least partly toblame for the four-day, 33-cent price rally. One source notes highhumidity and warm temperatures in the south, combined with lownuclear unit utilization are causing supply and demand to be verytight.

Another trader took a more technical point of view. “We brokethrough the 40-day moving average [Tuesday]. Funds are once againfollowing their playbook.”

Of all the market-moving factors yesterday, the hardest toquantify may be the lingering threat of tropical storms. Traderswere keeping a close eye on Tropical Storm Irene which could reachhurricane status by the time it passes over western Cuba today andheads toward Florida.

According to the American Gas Association, 49 Bcf was injectedinto underground storage facilities last week, bringing the totalto 2,936 compared with 2,952 of a year ago. Although the 49 Bcfrefill is on par with the five year average of 50 Bcf, it did comenear the top of preliminary market expectations, which were focusedon a 35-50 Bcf build. As of 6 p.m. the November contract was 5cents lower at $2.92 in computer-only Access trading.

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