After opening on a soft note following last Thursday’s latesell-off, natural gas futures plodded higher for the sixth Fridayin a row, as traders once again shied away from the short side ofthe market ahead of the weekend. The October contract advanced 5.3cents to close at $4.853, but even more impressive was the winterstrip, which advanced an average of 6.1 cents to finish at $4.76.

Several traders contacted by NGI were surprised by pricestrength Friday following a 60-cent price hike in just two and ahalf weeks. “[The market] set a new all-time high Thursday and thensold off in the last 10 minutes of trading. You would have thoughtthe market would continue lower [Friday],” said a Chicago traderafter watching in disbelief as October moved higher into theweekend.

However, while some traders were searching for answers for themarket’s upturn, others were tracking a tropical system in theAtlantic that as of press time Friday had the potential tostrengthen. While formal warnings had yet to be posted Fridayafternoon, the National Hurricane Center had begun tracking atropical disturbance located east of the Leeward Islands in theAtlantic Ocean. “This market is very susceptible to any bullishnews, and that’s exactly what it got,” a trader said.

Looking ahead, market watchers will come back from the holidayweekend with one less day in which to prepare for the lateststorage report from the American Gas Association. Last year at thistime, the market was able to add 66 Bcf to underground storagefacilities, and the five-year historical average refill this weekis 74 Bcf. However, following three straight injections of between52 and 55 Bcf, the market will be hard-pressed to match thosehistorical tallies, further widening this year’s storage shortfall.

After watching prices crest to a new all-time high this pastweek, bears would like to think their time is coming. Historically,September is the low point in the demand curve for natural gas, andmany cash traders have eschewed record-setting prices for bidweekbaseload gas in favor of what they hope will be cheaper aftermarket supplies. And while swing prices were still higher thanbidweek numbers for the most part Friday, they were offconsiderably from the level they had traded Thursday.

On the technical side of the market, October has uptrend supportfrom the 60-minute chart and Henry Hub first-of-month index, whichare both clustered in the $4.60-62 area. On the upside, resistanceis seen at the looming psychological barrier of $5.00 and thenagain at $5.137, which is described by 1.382 Fibonacci retracementprojection of the move from $3.61 to $4.715.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.