Riding a wave of bullish emotion, natural gas futures continuedhigher Friday despite forecasts of warming weather expected thisweek. After checking lower at $3.03, the November contract receiveda steady boost of buying pressure from commercials and speculatorsthat enabled prices to push above $3.10 in the early afternoon. Butjust when it looked as if the prompt month would finish the weeknear its high, a late round of pre-weekend profit-taking droveprices down to settle at $3.072, a net-0.8 cent advance on the day.

Bolstered by a two-week, 38-cent price increase the Novembercontract now appears poised to move to heights not seen in a spotcontract at Nymex since November of 1997. And while manymarket-watchers are starting to draw comparisons to the rally thatpushed prices to the $3.85 high two years ago this week, Ed Kennedyof Miami-based Pioneer Futures was not overly impressed by themarket’s movement Thursday and Friday. “This market is strugglingto move higher right now. If we don’t get a forecast calling forcold weather Monday, this thing could really come off before theNovember expiration.” Under that scenario, Kennedy feels that afinal November settlement Wednesday in the mid- to low-$2.90s isnot out of the question.

One the other hand, a Chicago marketer believes it will takemore than a negative weather report to reverse the head of steamthe market has built up. Looking ahead, he contends that storagewithdrawals will be the next bullish blip on trader’s radar.”Because of extremely warm temperatures last November, it is analmost certainty that this year’s withdrawals will outpace lastyear’s. That should keep bulls in control at least through themonth of November,” he reasoned. He may have a point. The pace ofwithdrawals was so slow last autumn that the month of November wasjust several Bcf short of being a net-injection month. Prior tothat, an average of 60 Bcf/week during November was pulled fromunderground storage facilities.

In daily technicals, Thompson Global Markets pegs resistance at$3.12-15 and $3.24. Support is found at previous resistance levelsof $3.03 and $3.00.

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