Buoyed by a massive buying binge by commercial traders who werelong paper positions and short January futures, natural gas futuressoared higher during the last 30 minutes of trading Wednesday,catapulting the market briefly above key resistance at $10.00. Whenall the dust had cleared and the orders tabulated in the data roomat Nymex, the numbers were staggering. During its 20-day tenure asprompt month at Nymex, January gained $3.773 or more than 60% tonotch the highest settlement in the history of the commodity at$9.98.

A Houston-based risk manager was quick to point to the efficacyof online trading systems, which allow nearly anyone to be a daytrader, as a reason for the late price rise. “Usually traders willenter into an EFS (exchange-for-swap) agreement near the end ofeach month in order to get out of their paper position,” he said.”However, because the market kept moving higher this month, therewas a disproportionate amount of people that needed the same sideof the EFS. As a result of the lack of players offering the otherside of the EFS agreement, those long paper and short futures wereforced into the futures market late [Wednesday]… This is what yousaw during the last 30-minutes.. Heavy [market-on-close] buying bythose looking to peel off their short positions at the close.”

According to the American Gas Association 175 Bcf was pulledfrom underground storage facilities last week, bringing totalworking gas levels down to 1,938, or 59% full. Traders were quickto call the storage report neutral as the 175 Bcf withdrawal fellneatly within the 155-200 Bcf range of expectations. However,versus historical comparisons, the number was slightly bullish asit narrowly exceeded last year’s 173 draw and the five-yearhistorical average of 148.

In its debut as Nymex prompt month last night in overnightAccess trading, the February contract was off to a slow start, uponly 1.9 cents to $9.305 as of 7:22 p.m. (EST). Resistance forFebruary is seen at $9.34 while support lags considerably at $7.09,according to Raffery Energy Group of New York.

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