After the January contract gapped 26.6 cents higher to open at $11.900 on Tuesday in its debut as the prompt month, the contract felt its way around, bouncing within a range from $11.670 to $12.150 before settling at $11.736, up 10.2 cents for the day.

Trading on Tuesday was like a seesaw until the new front month found its footing. Concerns regarding a cold front currently moving into key eastern energy markets had traders feeling kind of bullish.

“I didn’t really understand the rally, but I think a lot of the things that happen around the last few trading days of a prompt month and the first few trading days of a new prompt month are complicated, where traders have to establish new positions…rather than trade on broad market factors,” said a Washington, DC-based broker. “I still think those folks that established their short positions are going to have a white knuckle ride here in the sense that I believe that the potential exists for the contract to stay well above the $11.500 zone, which is where the January support comes in. It’s not quite as solid as the $11 support zone for December, but it is roughly the same chart area that December was holding at.”

With current market and industry conditions, the broker said natural gas futures still have a bullish tint. “We still have cold weather on the horizon and we are expecting a pretty decent withdrawal to be revealed in this week’s natural gas storage report for the week ended Nov. 25,” he said. “You have to remember the funds are still short here. If January continues to work its way up and we finally get a blast of cold weather, you could see one heck of a short-covering rally.

“Unlike the liquids futures, which continue to break lower, support not only holds in natural gas, but playable rallies also develop off of support,” the broker added. “The natural gas futures market seems to feel much more trepidation about not wanting to be on the wrong side of an up move. I still think for that reason, the psychology is there.

“We still have to have a decent rally from here before I think we get some massive bailing out by the funds as they switch around from a short to a neutral bias. I think that is still a ways away, but it certainly has potential.”

Looking toward support, the broker said the $10.075 high on Aug. 26 on the continuation chart is the key, which was right before the Hurricane Katrina gap. “Looking at candlestick analysis, the bottom of the gap is critical as we come back down again,” he said. “This thing would have to close convincingly below $10.075 to finally close that bullish move from the gap-up from Katrina.”

The industry will wave a not-so-fond farewell Wednesday to the end of the record-setting 2005 Atlantic hurricane season that pounded the United States and devastated oil and gas infrastructure in the Gulf of Mexico and onshore. While Nov. 30 is the traditional end of the hurricane season, Tropical Storm Epsilon slipped under the fictional deadline, forming Tuesday over the central Atlantic Ocean. Epsilon is the twenty-sixth named storm this year in the Atlantic, putting 2005 well above the record of 21 named storms set in 1933.

Late Tuesday afternoon, Epsilon was 800 miles east of Bermuda moving in a westerly fashion at 8 mph.

After a mild couple of days in the East, it appears another cold front is pushing in. A blast of cold air into key eastern energy markets has the bulls at least temporarily energized. According to AccuWeather.com a cold front was pushing toward the East Tuesday. “Westerly winds behind the front will drive cold air across the region Tuesday night and Wednesday. Locations in the 60s and 70s Tuesday will be in the 40s and 50s on Wednesday.” The forecasting firm went on to say that the warmth will hang on across the New England coast Wednesday afternoon. The cold air will surge into the region Wednesday evening and Wednesday night.

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