The November contract managed a $2.30 high and a 6-cent increase for the day Tuesday to $2.268 on a short-term cold weather forecast and a little fund buying. The modest market strength, however, is expected to be short-lived, according to several sources who point to few near-term fundamentals to inspire a significant rebound.

Ed Kennedy of Pioneer Futures said the early market strength Tuesday appeared to vanish by the afternoon. “The locals in early trading were trying to press the short side, and there was just enough strip buying that they just couldn’t push it down,” said Kennedy. “They covered shorts and we got through $2.25 and hit some buy stops from the funds. That gave us the push to $2.30. But then it just died. The afternoon session was just dead as a doornail. The locals got caught a little bit long and evened up their positions going into the close, which is why we had a little bit of a sell-off. But I tell you, if they try to push it through $2.30, I think they are going to find an awful lot of selling up there. I just can’t see this thing pulling a bull rally together anytime soon.” Kennedy sees support at Monday’s low of $2.14 and then $2.

The market is looking for a big storage injection again: 80-90 Bcf. Kennedy said he’s expecting 87 Bcf. However, the market is going to have to wait another day or perhaps longer for new storage data because the American Gas Association (AGA) said its web site has been infected by the “Nimda” computer virus and isn’t working properly. In a storage memo sent out yesterday, AGA Chief Information Officer Gary W. Gardner said, “Since the compilation has not yet been accomplished and the AGA web page (https://www.aga.org) has been failing off and on for the past 30 hours, the earliest compilation and posting of the storage estimate would be 2 p.m. Thursday, Oct. 4. If you have any questions, you may contact me by e-mail (ggardner@aga.org) or fax (202/824-7089).”

For several sources, it just delays the inevitable bearish impact. “I think there is still potential for November to break down, maybe not quite all the way to where October went off the board ($1.83) but even a probe under $2 would be more solid base-building work in terms of the spot continuation chart,” said Tim Evans of Thompson Global Markets. When asked at what point he would be willing to get into this market with a fresh long position, Evans said, “Sometime in 2004.”

“I don’t think the market warrants a longer term long position at this point,” he added. “We still have some serious fundamental problems ahead of us: high storage, the weak economy, but beyond that the weather comparisons with last year are going to be bearish in November and December. We had a record cold early winter last year, particularly in the Northeast, but also into the Midwest,” he noted.

“We’ve got a little bit of potential once we can get to the part of the year where we start to see storage withdrawals. But even after withdrawals begin we are still likely to see the year-on-year surplus continue to mount.”

Evans said he would only view the longer term prospects as constructive if November can stay above the lows that October made ($1.75). “Let’s say we test $2 and it holds, and we go off the board at $2.20. That would start to look supportive with the higher low and a longer term bottom being established. I think that would be a necessary step before we can expect to see something that looks an intermediate term uptrend on the individual contracts.”

The National Weather Service’s six- to 10-day outlook calls for below normal temperatures across the entire eastern United States, including most of Texas. Normal temperatures are expected across the Midcontinent and Plains states, and temperatures in the West are expected to remain above normal.

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