Fueled by a steady flow of short covering, natural gas futureserupted higher late yesterday morning as traders looked pastbearish storage data and focused on constructive short-term weatherand technicals. After testing support in the $2.65-67 area around10 a.m. (CST), the April contract rallied throughout the rest ofthe session to finish up 7.6 cents at $2.786.

Although some might suggest that any advances seen in the cashmarket for weekend flow will be a result of Thursday’s futures run,a Houston risk manager disagrees and maintains that cash will “havea mind of its own [Friday].” The cold front moving through theMidwest and into the Northeast should support the market tomorrow.There is a lot of unfulfilled buying still out there and thislittle spat of cold weather should magnify it.”

“Cover your shorts,” was the message Ira Hochman of NewYork-based Trot Trading gave his clients yesterday morning when themarket could not break below the $2.66 level. “We had a negativeday structure [Wednesday], but when we could breakthrough $2.66 youhad to cover,” he said.

A 50% retracement between recent highs and lows along with theApril contract’s low on leap day, the $2.66 level has been closelywatched by analysts, traders, and brokers the last couple weeks.While some saw solid support in that area, nearly everyone agreedthe market needed to retest the level before moving higher.

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