Propelled by heavy market-on-close (MOC) buying, natural gasfutures spiked to a new all-time high yesterday, as commercialtraders hedged their financial swap positions. After gapping higheron the open, the January contract rallied to $9.90 on rumors thatthere would be commercial buying at the close. Those rumors turnedout to be true and after sinking lower for much of the session, theprompt month raced back to $9.90 moments before the closing bell.January finished at $9.83, up 50.4 cents on the day.

However, MOC buying was not the only thing fueling futures gainson the first day of winter. The continuation of cold and snowyweather across much of the U.S., amplified by forecasts calling formore of the same, also played a role. According to the latest six-to 10-day forecast released yesterday by the National WeatherService, below normal temperatures are expected over a large areaof the country, spanning from New Mexico to Wyoming east to theAtlantic Ocean. In fact, the only area of the country expected tosee above-normal readings for the Dec. 27-31 period is the PacificNorthwest.

George Leide of Rafferty Energy Group advises against shortingthis market until it shows signs of running out of steam. Next onits agenda will be $10, which he feels could offer a bit ofpsychological resistance. “We have tested the $9.80-90 area acouple times now and failed to push past $10. Until we do, itstands as resistance,” Leide said.

Working against prices moving higher, he said, is the 60-centspread between January and February futures. “If we haven’t takenout $10 by the time January goes off the board next Wednesday, themarket will have to make up the difference with the Februarycontract.” With its 28.4-cent gain and $9.23 close yesterday, theFebruary contract continues to lag January.

However, Leide warned that any correction from these levelscould deposit prices $1.50 to $2.50 lower very quickly. Leide willsend up a yellow warning flag on a break beneath today’s $9.65 low.In the intermediate term, a break below the yet-to-be-filled chartgap down to $9.13 would indicate a correction under way.

Natural gas futures will close tomorrow at 12:00 (CT) ahead ofthe holiday weekend. Access trading will be closed Sunday andMonday evenings. The market will reopen at 8:30 (CT) Tuesdaymorning.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.