Adding to gains notched Thursday, the natural gas futures market finished the week on a positive note Friday as continued end-user buying met with pre-weekend commercial and speculative short-covering. And though the 4.5-cent advance and $5.552 close in the September contract was not shabby, it paled in comparison to the gains in this winter’s strip, which advanced 12.9 cents to close for the week at $6.877. At 68,647, volume in the gas pit was relatively light Friday.
Traders agreed that the gains by the natural gas screen late last week were attributable to a combination of weather forecasts and technical factors. After suffering a double-digit decline Monday in the wake of Hurricane Charley, bulls regrouped Wednesday to post three straight days of gains to close out the week.
According to the latest six- to 10-day forecast released Friday by the National Weather Service, above-normal temperatures are forecast for the Midwest and Northeast as well as much of the states of California and Texas for the Aug. 26-30 timeframe. Further out on the horizon, the NWS predicts a hot month of September for both the eastern and western quarters of the country. The center half of the country, meanwhile, is expected to see below-normal mercury readings.
But the first moderately supportive temperature forecast in weeks was not the only factor in bulls favor Friday. Also at work was technical buying brought on by the market’s inability to spend any significant time below the long-term uptrend line drawn off market lows dating back to February 2002.
On the upside, Craig Coberly of GSC Energy in Atlanta eyes the $5.695 level basis the October contract as pivotal. “Price action, wave count and the up turn and crossover of daily oscillators support a tentative conclusion that both the intermediate and short-term trends have turned up,” he wrote in a note to customers Friday.
To take this conclusion from tentative to “high probability,” Coberly looks for a settlement in October above $5.695. On Friday, October reached a high of $5.735, but slipped lower to close at $5.693, just a fifth of a penny below his key pivot point.
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