Buoyed by another in a string of supportive storage reports (151 Bcf withdrawal), natural gas futures turned decisively higher Wednesday as pre-weekend short-covering met virtually no selling resistance.

The January contract was the biggest beneficiary of the buying, with prices cresting the $6.40 level just before the closing bell. It finished at $6.379, up 23.6 cents on the contract’s penultimate trading day. January futures are set to expire at 2:30 p.m. EST Monday.

According to the Energy Information Administration, 151 Bcf was pulled from storage during the week ending December 19, dropping levels to 2,699 Bcf. Versus expectations centered on a net draw of 120-151 Bcf, the report was modestly supportive. Last year at this time the EIA announced a 95 Bcf takeaway and the five-year average analog came in at a nominal 110 Bcf. Storage now stands 159 Bcf above year-ago levels and 3 Bcf less than the five-year average.

Because of Nymex’s early closing (1 p.m. EST) and the early release of storage data (noon EST), traders had only an hour to digest and then react Wednesday. Bears struck first immediately following the report, and pressured the market back down toward the $6.00 level. However, the selling failed to produce a new low for the week, and bulls made them pay for falling short of this goal. The resultant rally notched a gain of 18 cents in five minutes early Wednesday afternoon with buyers easily pushing the market through a key chart gap on the daily chart.

“The market neglected to fill in the chart gap [Tuesday], but it didn’t miss the opportunity [Wednesday],” issued George Leide of Rafferty Technical Research in New York. Specifically, Leide points to the chart gaps etched by the January and February contracts at the $6.27-30 and $6.34-36 levels respectively as being pivotal price levels.

Looking ahead, Leide is now cautiously bullish and believes the February contract can attain the next set of upside targets at $6.65-80, providing it holds above the $6.20 mark. February, which becomes the prompt contract at 4 p.m. EST Monday, gained 15.7 cents to close at $6.392 Wednesday. “The only selling we are seeing out there comes in after a rally. Nobody is selling this thing on weakness or at the lows….. The storms of [the prior week] have spooked the market and the most fear is to the upside.”

And while Leide’s assessment is based mostly on technical signals he has received from the market, he is not about to turn his back to fundamental factors. If the cold weather fails to show up, it will be hard to remain at these levels, he continued, pointing to the softness exhibited by the market during the warm-up early last week.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.