Natural gas prices continued to defy gravity Tuesday, as traders added to their long positions in the hope that cold weather outlooks will be validated next week by plummeting mercury readings. The bulls did not have it easy, however, as they were forced to battle back from an early foray into negative territory on the day. Buy stops helped their cause, as prices began to rebound and by noon EST, bulls had notched a fresh one-week high at $2.87. The December contract closed just off that level at $2.852, up 6.1 cents for the session.

Traders agreed winter weather outlooks continue to impact traders’ decisions. Although any sort of bullish weather remains more than a week away, market watchers are well aware how influential weather forecasts can be. It is because of that experience that short-term traders have been hesitant to sell this market, opting instead to bet on Old Man Winter and accumulate long positions.

Corroborating the National Weather Service’s six- to 10-day outlook released Monday, EarthSat Energy Weather looks for strong storms to usher in moderate to strong cold air across the Rockies, Plains and the western Midwest next week. By Wednesday that cold air could also reach Chicago, which along with the rest the of the Midwest is behind on its snow-cover, the group said.

However, price-friendly weather forecasts are not the only factors influencing prices this week. Also of impact are technical features, which have paved the way for the price rally. Since meeting with stubborn support at the $2.50 level last Thursday, the December contract has been a technician’s dream, filling in chart gaps at $2.59-635 and $2.725-74 en route to a 30 cents-plus advance. The next technical hurdle for bulls is December’s 40-day moving average at $2.86. A close above that level of resistance could be a setup for a test of the $3.08-22 chart gap from the weekend of Nov. 2-5.

Looking ahead to fresh storage data today, traders are bracing for either a small net injection or withdrawal. Citing degree day data from the NWS suggesting it was warmer than had been forecast last week, Thomas Driscoll of Lehman Brothers in New York expects to see a 1 Bcf net injection in this afternoon’s AGA report. A number of that magnitude will compare bearishly against last year’s 94 Bcf withdrawal, as it would increase the year-on-year surplus from its current 365 Bcf level to 460 Bcf.

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