Capping a tumultuous week of trading, the natural gas futures market rose Friday as a wave of weather-related short-covering boosted prices throughout the morning. Only modest softening was seen in light afternoon trading, leaving the November contract to close at $4.767, up 8.1 cents on the day.

Traders polled by NGI agreed that the market’s ability to rebound Thursday following another seemingly bearish storage report gave bulls confidence Friday.

According to the Energy Information Administration, storage increased by 100 Bcf for the second week in a row, building gas stocks to 2,788 Bcf as of Sept. 26. With just 212 Bcf left to reach the 3,000 Bcf comfort level by Nov. 1, weekly storage injections will need to average only 42 Bcf a week.

But starting the withdrawal season with 3,000 Bcf or more is no guarantee against higher prices later. Even with a near record 3,172 Bcf at the beginning of the withdrawal season a year ago, prices still peaked last winter at more than $10 as sustained cold plundered reserves to record low levels. The message here is clear: weather is the key.

Though still more than two months away as far as the calendar is concerned, winter began with a fury last week with mercury levels dropping below the freezing mark across much of the Northeast, Mid-Atlantic, Midwest and Great Lakes regions of the country. Snowfall was recorded in Michigan Thursday and Friday, as well as across the northern tier of New England and New York, where mild temperatures up until last week had prevented the leaves from reaching peak color.

But don’t stow away your golf clubs quite yet. After a chilly beginning to the workweek, moderating temperatures are expected for much of the East by Wednesday, according to the latest six- to 10-day forecast from the National Weather Service. In fact, only the Southeastern U.S. and the far west coast of California, Oregon and Washington states will be spared from the above-normal weather expected to set up from Oct. 8-12.

While moderating weather this week will undoubtedly reduce heating demand and lower cash prices (which were already falling Friday), it is not a given that futures prices will tumble lower as well. “What we saw last week could be stage one of the rocket,” suggested Tom Saal of Commercial Brokerage Corp. in Miami. “I think that prices will have a hard time going lower between now and the start of winter.”

In addition to concern over the upcoming winter and the lingering threat of hurricanes, the natural gas market has a looming bullish factor in the form of the large net short position held by the speculators. According to the latest Commitments of Traders Report released Friday by the Commodity Futures Trading Commission, these non-commercial traders had actually reduced their net short holdings from nearly 40,000 as of Sept. 23 to about 36,000 as of Sept. 30.

Prices increased 13 cents during that one-week period, a small taste of what might occur if these fund traders cover the rest of their shorts, traders agree. The 40-day moving average — a key level for speculators — is currently at $5.027 in November futures. A move above this level could accelerate the non-commercial buying push.

In daily technicals, last week’s relatively strong finish may also pave the way for further advances. At $4.767, Friday’s November settlement was just barely in the upper half of last week’s $4.565-940 trading range and above last Monday’s gap higher open at $4.74. Resistance is seen at November’s regular session high last week at $4.94 and at the Access session high of $4.98.

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