After a somewhat subdued trading session Tuesday, natural gasfutures sprang back to life Wednesday in a see-saw battle betweenstorage bears and weather bulls. But, when the dust had settled itwas the bulls who took the day, leading one Houston-based trader tosurmise “weather is always king in natural gas.” The prompt Januarycontract settled up 3.8 cents at $1.99 in the regular tradingsession, before adding an additional 4 cents to finish at $2.03 inlast night’s Access session.

A Gulf Coast marketer thought there was little doubt yesterdaymorning that futures would trend higher on the day. “The buzz thismorning is the forecasts calling for colder than expectedtemperatures going into the weekend. Cash prices are already up7-10 cents and I’d expect futures to open stronger and immediatelytest the $2.00 barrier. He turned out to be right and then some,when the January contract opened higher and tested resistance inthe $2.07 area before filtering lower for the rest of theday-session.

Tom Saal of Miami-based Pioneer Futures agrees that forecastsfor colder temperatures prodded the market higher yesterday, addingthat light fund buying was at the heart of the rally. However, Saalwarns that those gains will be wiped out just as fast as they weremade if the actual weather doesn’t materialize.

Another source felt the strength of the rally yesterday wasdiminished because of uncertainty about last night’s storagereport. “There were buyers who elected to wait on the sidelinesrather than get on the wrong side of the market ahead of the[American Gas Association] report.”

But those fears were silenced last night when the AGA data wasreleased. Coming in the middle of the expected 20-80 Bcf range, the49 Bcf withdrawal gave buyers the green light they were lookingfor.

A California-based marketer added that although crude oil doesnot share a direct price correlation with natural gas, its$1.37/bbl rally this week has given sympathy to the natural gasgains. “A spike in crude oil prices is not something that wouldprompt me to buy into natural gas. However, if I were short naturalit would make me seriously think about covering some of my gaspositions.”

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