Bulls have not had much to smile about in the last five monthsat the New York Mercantile Exchange, so it was to their surpriseand delight when a trio of factors — storage, technicals, andanother possible tropical storm — combined to lift the marketThursday. The three remaining months in 1998 all received an almostequal boost with October edging out the others slightly byadvancing 6 cents to settle at $1.712 in moderate trading activity.

Released too late to affect trading on Wednesday, the AmericanGas Association (AGA) storage report was a factor behind today’sbuying, sources said. That report, featuring a 57 Bcf injection,was slightly less than most industry estimates in the 60-70 rangeand remarkably less than last year’s 84.

A California marketer pointed to the inability on the part ofthe sellers to fall through the $1.63 level for October onWednesday as positive. “That lack of selling gave bulls reason tobelieve the market is susceptible to short-covering and theresulting buying sent the market higher.” While some analysts aretargeting the $1.50 level as a downside objective for the Octobercontract, he feels the market, and particularly the 12-month stripwhich has traded down to $2.137, is a good value now.

However, another analyst feels it is too early to think theshoulder period has been played out. He feels the market might haveto wait until early next week for an indication of where the thingsare headed. “Labor Day weekend is one of the weakest demand periodsof the year and many people termed up their gas through nextTuesday. By then, we will have a much better idea just how long orshort people are in September. Plus, people are already talkingabout next Wednesday’s AGA report which will show lower injectionsdue to Hurricane Earl related shut-ins.

A Gulf Coast marketer agreed that the market will become muchmore transparent next week as people step back into the market.However, he estimates the market is about 400 MMcf/d long from thefirst of the month. “That,” he says “paints a pretty gloomy picturefor both the cash and futures markets right now.”

As Earl was being downgraded to tropical storm yesterday focuswas switching to the next candidate for naming in the Atlantichurricane season. A tropical wave located in the central Caribbeanwas moving westward at about 15 mph with potential for development,the National Weather Service said.

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