Supported by the unmistakable profile of speculative fund buying, the natural gas futures market made it three in a row Wednesday as prices soared to their highest levels in nearly two months. After quickly filling in a gap on the daily chart, the January contract worked its way higher throughout the trading session on a steady diet of short-covering.

The prompt contract finished at $5.756, up 17.7 cents for the session. More modest gains rounded out the rest of the winter strip, with the February and March contracts advancing 15.1 and 9.4 cents respectively. By comparison, the next summer’s strip actually lost ground.

Weather remained the big story again Wednesday, market-watchers agreed. For the eastern half of the country, the weather delivered a one-two combination blow. In addition to experiencing the coldest temperatures thus far this season Wednesday, Northeasterners also learned that snow is in their forecast for the late week and weekend.

Looking ahead, however, even the most addicted weather watchers will turn their sights to the supply side of the market Thursday morning when the Energy Information Administration releases fresh storage data. Consensus estimates are centered on a 30-42 Bcf withdrawal, which would modestly exceed the five-year average takeaway of 29 bcf. A year ago the market pulled a hefty 91 Bcf as the winter of 2002/03 dug in its claws.

Despite the likelihood for a bearish comparison versus last year, most market watchers sense there is little threat of a bearish surprise. “Our estimated 20 Bcf withdrawal would only fall 9 Bcf below the five-year average decline, hardly enough to dictate a hard reversal to the downside,” chipped in Tim Evans of IFR Pegasus in New York.

For Evans, the real bullish factor was the way in which the January contract absorbed early selling Wednesday and held support at $5.44. “We think that January would have to fall through $5.115 now in order to tip the balance back toward the $4.82 bottom from Nov. 24.” On the upside, selling is seen just past Wednesday’s high at the early October top of $5.80. Should that level hold on an early test, chartists see a retracement lower. A break higher would put the $6.00 target squarely in bulls’ sights, they agree.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.