Adding to gains achieved during the Wednesday evening Accesstrading session, the futures market picked up momentum yesterdayamid moderate short-covering activity. The February contractfinished up 6.5 cents to $1.892 and in doing so not only settled inthe top half of its daily range, but also near the important $1.91resistance level.

Traders agreed that a combination of a larger-than-expectedstorage withdrawal Wednesday and an improving outlook spurred theposition squaring yesterday. However, some traders remain mystifiedby the three-day turnaround in prices, adding that nothingfundamentally has really changed. Storage levels are currently 372Bcf more than last year.

Tom Saal of Miami-based Pioneer Futures said that whereasstorage and weather do not support the price strength, the loomingnet-short positions currently held by the market do. “Both fundsand commercials are holding some sizeable shorts, most of which arein the front month. The market is now focused on the $1.91 level,which is the top of a descending wedge formation. A settle above$1.91 could prompt fund buying right on through the 40-day movingaverage at $1.95.”

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