Buoyed by private forecasts that cast doubt on governmentforecasts calling for a warm up, along with several constructivetechnical features, natural gas futures erupted higher yesterdaymorning as weak shorts exited their newly acquired positions. TheFebruary contract finished 77.7 cents higher on the day at $8.966after reaching a high at $9.189.

According to Jon Davis of Salomon Smith Barney, a more zonal jetstream over the next few weeks will supplant the high amplitude jetstream prevalent for past 4-5 weeks, allowing temperatures tomoderate in the central and eastern U.S. And while a similar set-uplast winter produced temperatures 10, 15 and 20 degrees abovenormal, that will not be the case this year, he continued. “Thereason for this, lies in the snow cover variable across the US. Toput it in political terms that everyone can understand, it’s thesnow, stupid!”

Davis went on to explain that most weather models do notaccurately take into account existing snow cover in temperatureforecasts. An example of this is the forecast for the Chicago areafrom earlier this week. On Sunday and Monday, forecasts werecalling for highs in the Chicago area to reach into the middle 40sby later this week. As it turns out, temperatures in Chicago havebarely reached into the 30s, he said.

However, snow on the ground in the upper Midwest was not solelyto blame for the futures strength yesterday. Also of impact wastechnical short covering in Wednesday night’s Access tradingsession and then again on the open Thursday as traders propelledFebruary above a key momentum number at $8.27. Once above thatlevel, the market was primed for follow-through to the $8.68-75level, which is an area on the intra-day charts where little or notrading activity was seen on the move lower Tuesday, said technicalanalyst Ira Hochman.

Looking ahead, Hochman sees no reason to short this market onstrength, especially if February can stay above the $9.10 level.Instead, he recommends buying dips on moves toward $8.90, $8.77 and$8.65.

As it turned out, that advice was golden because after checkingdown to $8.95 just before the close yesterday, the Februarycontract vaulted higher yet again last night in Access trading. Asof 6:15 p.m. (EST), the prompt month had tacked on another 23.4cents to trade up to 9.20.

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