Bolstered by strong cash prices and constructive technicals, thenatural gas futures market bubbled higher yesterday as locals bidprices higher in light Columbus Day trading. And by finishing at$2.825, the November contract fell just a penny short of its $2.835high for the day and several cents below key resistance at the40-day moving average. Estimated volume was light, with just 60,947contracts changing hands.

After being “burned” for a 4-cent loss on Northern NaturalDemarcation, a Houston marketer was quick to point to rising cashprices as a reason for the screen’s advance. “We came out sellingDemarc at $2.48, thinking prices were going to come off. Theydidn’t, and we were forced to fill in late at $2.52. With thisvolatility, its too tempting not to take a position,” he lamented.

Ed Kennedy of Miami-based Pioneer Futures, on the other hand,believes Monday’s rebound was more a result of unchecked localbuying rather than a reaction to the physical market. “This was nota case of what happened, but what didn’t happen that caused therally. Locals and [speculators] were buying but there was anabsence of trade selling to go along with it.”

Looking ahead at today’s trading session, Kennedy admits themarket could receive a boost if the Novmeber contract moves aboveits 40-day moving average at $2.859. “Right now the trend following[speculative trading funds] are on the sidelines-just waiting foran opportunity to enter. The inflationary funds, who are naturallylong because they hedge against the risk of inflation, areresponsible for the non-commercial net long position,” he said.

As of yesterday evening, the market was already playing out theaforementioned bullish scenario, by moving 3.4 cents higher to2.859 in last night’s Access trading session.

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