Despite weather in the East more representative of early September than late October, natural gas prices pressed higher Monday as commercial fund buyers buoyed prices to levels not seen since late August. The November contract received the biggest boost, checking 12.6 cents higher to close at $2.807. The 12-month strip lagged slightly, notching a 8.1-cent gain to $3.171.

While some traders were surprised by the market’s strength coming off a weekend of unseasonably warm temperatures in such population centers as Chicago, Boston, New York and Washington D.C., others said it was expected following Friday’s strong finish. “We closed Friday near the highs for the week, setting the market up for a retest of those highs [Monday], a gulf coast cash trader said.

As it turns out, that move to new highs didn’t take long. With its $2.74 opening trade, the November contract not only gapped higher on the open yesterday morning, but also gapped above last week’s $2.72 high. However, the market then sputtered briefly, enabling sellers to push prices back down to fill in the gap. At 10:11 a.m. EDT, the November contract was 3 cents beneath Friday’s close, prompting traders to wonder if Friday’s advances were an aberration. That question was quickly answered and by 10:15 the market was in positive territory to stay.

A broker was quick to point to the market’s ability to hold the November contract above its 40-day moving average ($2.558) as a reason for the mid-morning rebound. “The longer we remain above the 40-day, the more supportive it becomes,” he offered.

Looking ahead, the market’s chances to remain above the 40-day moving average may be increased when fresh storage data are released Wednesday by the American Gas Association. Expectations ahead of the AGA’s report call for a 40-60 Bcf injection, which would fall short not only of last week’s 63 Bcf refill, but also last year’s 71 Bcf injection. Looking even further ahead, Tim Evans of IFR Pegasus makes the case that the bullishness will carry over into next week’s report as well. “If the forecast degree day accumulations for this week prove accurate, we’d estimate a 40-50 Bcf refill to follow versus a 70 Bcf comparison [last year].”

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