Natural gas futures on Monday geared up for another run at psychological resistance at $5 as the November contract recorded a high on the day of $4.916 before closing at $4.835, up 5.4 cents from Friday’s regular session close.

November futures have ventured north of $5 four times in the last two weeks, but to date have not been able to close a regular session with a five in front of the price. Some market watchers believe that could change soon.

“The forecasted warm-up for this week doesn’t look like it will be as warm as once thought for a number of regions of the country. Cold is then expected to return swiftly, which could allow prices to rise here a bit. I think the bulls were regrouping and reloading last week as the front month reached a low of $4.355 on Thursday,” said a New York broker. “I think the roadblock at $5 will come down sooner rather than later. However, there are two schools of thought. Some traders say the more times resistance is tested the more likely it will ultimately fall, while others believe the more tests that a resistance level repels only makes it more firmly entrenched. We’ll have to see which theory holds true this time around.”

For the moment near-term weather forecasts give the edge to the bulls. “A cool trough over the Midwest early will bring widespread below-normal temperatures,” MDAEarthsat said in its recent six-to 10-day forecast. It went on to say that the trough will weaken before moving eastward but should bring some marginal below-normal temperatures to the Northeast by the second half of the forecast period. “The next trough will arrive in the West around mid-period before pushing into the Plains during the last couple [of] days.”

Analysts are taking a close look at Friday’s release of open interest figures by the Commodity Futures Trading Commission. For the five trading days ended Oct. 13, November futures fell a stout 29.2 cents, and according to one observer, it looks like the funds and managed accounts may have been back to their selling.

“Large speculative holdings were up by 5,469 longs [contracts] and were up by 10,412 shorts over the latest week. Commercial accounts were up 7,517 longs and were up 4,497 shorts, while small speculators and hedgers added 4,118 longs and added 2,195 shorts,” noted Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm. He said open interest (futures only) grew by 52,972 contracts as prices worked lower. “That looks like heavy selling, and large speculators sold this market heavily. Small specs and hedgers and commercials were also selling, although they both bought more than they sold,” he said.

©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.