Without another large storage injection to pull the rug out from under the market (AGA delayed its report until Thursday), technical factors and a short-term cold front that’s expected to move across the Midwest and Northeast later in the week enabled November gas futures on the New York Mercantile Exchange to continue climbing Wednesday. The near-month contract reached a high of $2.360 and settled at $2.320, which was a 5.2-cent daily increase. The daily low was $2.270.

“The initial failure to drop caused some short covering, and some locals were trying to run some stops,” said Kyle Cooper of Salomon Smith Barney. “I think the technical picture is improving, being that it hasn’t fizzled out yet. We have a little cold weather, maybe five or six days. But that doesn’t appear to be a change in the weather pattern; it’s more of a one-time blast. Overall, the fundamentals are still bearish. But we do have the possibility of some further upside. The longer it holds up here, the more likely it is to flush some shorts out of the market. I don’t think it will be sustained for very long.”

Tim Evans of Thompson Global Markets noted that November has worked back up to failed support at $2.35, with “further progress pointing to the $2.50 high of Sept. 21 instead. We also see heavy failed support at $2.60 as an intermediate-term barrier to upside progress. In addition to inspiring thoughts of these higher levels, today’s rally also sets the $2.25 pivot more firmly beneath the market as a valid short-term support. A break of this level and we see November heading back to Monday’s $2.14 low. New lows and we would be on the lookout for a test of psychological support at $2.00 or the $1.76 low set by the expiring October contract as a spot benchmark.”

Weather appears to be the major factor influencing prices right now, said another observer. “The market will temporarily, in my opinion, react positively to this [cold weather] news because it has had so little for so long,” said Jay Levine of Advest Inc. “For those end-users that have been comfortably on the fence, pondering what to do — holding out as I’ve been suggesting for many months, watching prices fall — the time is getting closer to consider some light long hedges.”

Meanwhile, Nymex’s executive committee decided to change the trading hours for its gas futures and options contracts for Oct. 4, so that they close at 2:30 p.m. instead of 2 p.m. EDT, as previously announced. Nymex is extending the hours so that the market can assess the results of the American Gas Association’s weekly storage report, which was delayed until Thursday because of technical problems with AGA’s web site.

The AGA said Tuesday it would not be able to publish its gas storage report until Thursday at 2 p.m. because its web site was infected by the Nimda computer virus. It said Wednesday its web site was back on line and “appears to be stable.” Subscribers should check their ability to access the storage survey today to help determine if the subscriber’s pass code or access has been affected, the association advised. Questions about the delay should be directed to AGA Chief Information Officer Gary W. Gardner (email: ggardner@aga.org or fax 202 824-7089).

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