The recent bullish momentum in natural gas futures continued on Tuesday as December natural gas futures punched north of $7 to close at $7.219, up 38.1 cents from Monday’s close. Unlike on Monday, crude futures moved in the same direction Tuesday as the December contract added $6.62 to close at $70.53/bbl.

“I think we saw a little bit of a follow-through as some technical models went bullish during the day,” said a Washington, DC-based broker. “Once we got above $6.900, I think those models turned to a ‘buy’ signal. I also think natural gas moved higher in sympathy with crude. Some people believe the Saudis have cut their crude output significantly, with one report pegging the number at 900,000 b/d. I think that sparked crude on the day.”

Focusing solely on natural gas, the broker said that besides a technical pop and some follow-through, there really wasn’t anything significant out there to explain the move. “The weather picture has not changed drastically. I don’t know whether you can blame this all on the slightly cooling forecast for November. The projections had been for above-average temperatures, but it is now expected to be average. I don’t know whether that is worth a 40-cent gain on the day….. It just appears that some money is flowing back into the commodity space. I don’t know whether people see the bull as reigniting and that happy days are here again with Obama. We were very quiet during the day; there really was not a lot of commercial buying going on, at least with us. Some of the gains Tuesday could have been from fund short-covering.”

Heading into Tuesday’s session, some analysts were impressed with Monday’s seemingly modest 5.5-cent advance. “Reasons behind the independent show of strength are difficult to pin down. However, [the National Weather Service (NWS)] forecasts suggesting a significant cold spell beginning later this week and extending through most of next week appear to be forcing some fund capital off the short side of the market,” said Jim Ritterbusch of Ritterbusch and Associates. He added that as December futures push up against $6.900, “we would not rule out some additional upside price follow-through capable of carrying up toward the late October highs at the $7.33 area.” Ritterbusch couldn’t have been more correct as the $6.900 break on Tuesday did trigger a run-up into the mid $7.30s.

The recent futures strength hasn’t received much support from near-term temperature forecasts as the NWS forecasts far-below-normal heating requirements. For the week ending Nov. 8, the NWS says New England will experience 123 heating degree days (HDD), or 23 below normal. New York, New Jersey and Pennsylvania should bask in just 97 HDD, or 35 below normal. Ohio, Indiana, Michigan, Illinois and Wisconsin should see 81 HDD, a whopping 67 below normal.

This is in stark contrast to the week ending Nov.1 when a bout of cold Canadian air slid across the Upper Midwest and Mid-Atlantic, dumping lake-effect snow on Michigan and New York. For the week ending Nov. 1 the NWS calculates that New England received 139 HDD, or six more than normal, and the Mid-Atlantic had to endure 135 HDD, or 16 more than normal. The Midwest was hit with 141 HDD, or 11 more than normal.

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