Since notching a $2.12 low during the first week of this year,the natural gas futures market has shown a propensity to look pastvirtually all bearish information and focus on anything out therethat is remotely bullish. Witness yesterday, when prices sank earlyon fizzled hurricane fears only to rebound fiercely as tradersrallied natural gas in sympathy with spiking crude oil prices.

October natural gas finished up 1.7% at $5.295 while Octobercrude was up 2.6% at $36.88.

After slipping lower in overnight Access dealings, the futuresmarket gapped six cents lower at the open Monday as tradersattempted to take the storm premium out of prices. That, however,was unsuccessful, and after reaching its daily low at $5.08 duringthe first hour of trading, the market chopped higher throughout therest of the session.

“This market rallied 30 cents last week on the threat that ahurricane would impact supplies this winter in the Gulf of Mexico.The storm took a right turn but the market continued higher,” saida Northeast buyer somewhat incredulously.

Gordon, which became a hurricane in the Gulf of Mexico over theweekend, affected mostly weekend-only deliveries and therefore wasquickly deemed a non-factor by traders (see related story).

Looking ahead, most traders agree that the next big test forprices will be whether or not cool weather materializes early thiswinter in key northern gas consuming regions. While forecasters arepredicting a normal winter, that could come as a bullish surprisefollowing three winters with mostly above normal mercury readings.

In the meantime, however, traders remain bullish in thenear-term. Cynthia Kase, of New Mexico-based Kase and Company, forexample, looks for a split target of $5.89 and $6.28, but admitsthat prices could encounter resistance between $5.42 and $5.64 onthe move higher. Any correction, is likely to be minor, and in thatevent prices are likely to hold $4.775 in October, $4.905 inNovember and about $5.00 in December, she advised her clients inher weekly commentary.

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