Buoyed by double-digit gains in the cash market, along with the release of another in a string of bullish long-range weather outlooks, natural gas futures erupted higher Tuesday, as traders pressured the market to new four-week highs. The November contract gapped a dime above Monday’s high, and never looked back yesterday, finishing with an impressive 21.4-cent advance and $2.592 closing price. Trading volume was high, with an estimated 90,649 contracts changing hands.

Traders agreed that the passage of a cold front through the Plains, Midwest and Northeast this week flushed buyers out into the cash market Tuesday. “With storage so full, many utilities elected to go into the month of October short physical supplies under the assumption they could buy in the swing market if the need arrived,” a broker said.

Snow was recorded in Kansas City Monday, and Chicago was expected to reach a high of only 50 degrees yesterday, some 15 degrees below its normal for this time of year. Meanwhile, the cold front was expected to drop mercury readings significantly in the Northeast today, as nighttime temperatures were expected to approach freezing in the suburbs outside Boston, New York and Washington, DC.

But if you don’t like the weather, wait a minute because it will change. “The flip side is that cash prices will likely come off just as quickly when the weather moderates this weekend,” the broker continued.

However, looking past this weekend, the nation could be in store for a cooling off period. According to the latest six- to 10-day forecast released Tuesday by the National Weather Service, below normal temperatures are expected across a protracted area of the western U.S., extending east to the Great Lakes.

Further out on the horizon, the outlook is equally bullish. According to Salomon Smith Barney meteorologist Jon Davis, this winter will not revert to the record warm winters of the late-1990s. Instead, he expects this winter to be among the coldest winters in the last 106 years (see related story this issue).

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