Fueled by another round of bullish weather forecasts andfollowing on the heels of gains achieved in Thursday night’s Accesstrading session, natural gas spiraled higher Friday, as traderstook back ground lost earlier in the week. When the dust hadcleared and the orders were counted in the data room at Nymex, theJanuary contract was 98.3 cents higher on the day, but still off18.8 cents for the week.

In an updated six- to 10-day forecast released Friday, theNational Weather Service was looking for below normal temperaturesto invade almost the entire lower 48 states for the Dec. 21-26period. Only North Dakota and Montana, where it will be coldnonetheless, were expected to see normal mercury readings.

Also of influence, traders agreed, was the release late Thursdayof long-term 30- and 90-day forecasts by the NWS’s ClimatePrediction Center. According to the CPC, below normal temperaturesare expected over densely populated areas from Pennsylvania and NewYork State across the Upper Midwest and Great Lakes regionsincluding Minnesota.

However, waiting for the latest weather forecast was not theonly game in town last week. Although more latent in its impactthan the temperature predictions, the weekly storage figure was anundeniably bullish factor as well. According to the American GasAssociation, 158 Bcf was pulled from underground storage facilitiesduring the week ending Dec. 8, bringing working totals to 2,271Bcf, or 69% full. Although the withdrawal fell neatly within the140-170 Bcf range of market expectations, it more than doubled the73 Bcf withdrawal seen both the previous week and last year at thistime.

For Tim Evans of New York-based IFR Pegasus the truly bullishnews is yet to come. “With below normal temperature [last] week, wesee this [588 Bcf year-on-year] shortfall expanding in [this]week’s data by perhaps another 40-50 Bcf. From that point, even ifthe weather is warmer than in the same week a year ago, we think itwill prove a major accomplishment just to get the deficit back downto the current level. Last spring we bottomed at 1,008 Bcf,implying that a match of last year’s storage pattern going forwardwould leave us with just 420 Bcf on hand at the end of the winter.We hardly consider that a bearish factor,” he wrote in his dailyPegasus NatGas Report last Wednesday.

If prices are able to move higher this week on bullishfundamentals, the market will need to punch through several levelsof overhead resistance. The first objective will be Friday’s $8.55high. Once above that area, the market will look to retest thebottom of last week’s island reversal at $9.00.

However, a move toward $9.00 would represent a sellingopportunity, says Gerald Rafferty of New York-based Rafferty EnergyGroup. “There was some real damage done to the uptrend when themarket gapped below $9.00 Tuesday to form an island reversalpattern. We had no problem retesting the $7.20 level. I would saythat we now stand a good chance of entering a sidewaysconsolidation period between $7.20 and $9.00. Because of that, Iwould look to sell rallies toward the $9.00 level and buy themarket on weakness down to $7.20.”

©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.