Punctuated by a gut-wrenching final 45 minutes in which the spotcontract plummeted, spiked and then fell again, natural gas futuresfinished on a strong note yesterday in a classic short-coveringrally.

The February contract led all contracts, bouncing 8.7 centshigher to $2.61 amid typical expiration-day volatility.

In addition to last-day position squaring, traders pointed onceagain to healthy demand in the cash market as a contributing factorin the futures price rise. After an initial drop, Henry Hub cashprices have clawed their way higher all month, trading up anothercouple cents yesterday to $2.75. Comparatively, NGI’sfirst-of-month index was a $2.37.

For bulls, last night’s delayed release of fresh storageinformation fell in the “better late than never category.”According to the American Gas Association, a hefty 195 Bcf waspulled from underground storage facilities last week, dropping thetotal working gas to 2,017 Bcf. Because that draw down was morethan the slight 92 Bcf figure last year, storage levels are back ina deficit to last year after briefly posting a surplus last week.

Looking ahead to March’s first day of trading in the limelight,traders are mixed as to whether it will continue higher whereFebruary left off or if it will crumble lower. Thompson GlobalMarkets of New York believes the key may lie in the contract’sability to stay above support at $2.46-48. A failure at that levelcould prompt selling down to $2.37 or to longer term support at$2.20. On the upside, the prior high of $2.65 will be the firsttest.

At least initially, the March contract appeared to be in like alion as traders promoted prices 3.8 cents higher to $2.587 inafter-hours Access trade.

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