Not satisfied with the nine-month high notched on Tuesday, November natural gas futures continued to press the upside for a majority of Wednesday’s regular session before collapsing in afternoon trade to close at $5.100, down 6.1 cents from Tuesday’s finish.

The prompt-month contract reached a new high for the move of $5.318 at 1 p.m. EDT before retreating to close out the session. Despite the late weakness, at least one broker doesn’t think the bulls are finished just yet.

“We saw some pretty violent movements in natural gas prices on Wednesday. Even though we reached the $5.30s, the contract’s inability to settle positively might mean that this rally of the last eight weeks might be reaching a critical point,” said Gene McGillian, a broker at Tradition Energy. “We’ve basically bounced $3 — more than doubling the value — in two months. It looks like we might have found a little bit of resistance above $5.30. That said, I think we likely still have some further gains here. I believe people have some shorts square in their sights and are going to continue to apply some pressure until there is some more capitulation on their parts. The market doesn’t look like it has turned yet.”

Commenting on the all-time record storage predicament, McGillian said he thinks “the near-capacity storage levels have already been priced into the market. With that said, I think folks are turning their attention to the winter heating demand on the near horizon. Also, with the drop in rig counts…if we see a pickup in industrial demand, the market will be vulnerable to a lot of pressure on the shorts.”

Looking at Thursday morning’s natural gas storage report for the week ending Oct. 16, McGillian said he is expecting the Energy Information Administration to report a 27 Bcf injection. “The injections over the last few weeks have been slightly larger than the industry’s expectations and I expect that trend to continue in this report. It’s always more difficult to get a feeling for injections during the shoulder season.”

The heating load in a number of regions of the country last week has brought all of the industry’s expectations lower for this report. Bentek Energy is projecting an injection of 25 Bcf, which would bring inventory levels to 3,741 Bcf, which is, of course, yet another all-time record working gas level. The research firm expects a 12 Bcf build in the East Region with the Producing and West regions adding 10 Bcf and 3 Bcf, respectively.

The number revealed Thursday morning at 10:30 a.m. EDT will be compared to last year’s 71 Bcf build for the week and the five-year average injection of 60 Bcf.

Weather bulls got another big boost with the release of a highly supportive winter weather outlook early in the week. The newly formed Commodity Weather Group (CWG) in Bethesda, MD, is calling for a winter colder than has been seen in several years. “The pattern expected this winter argues for more extended and intense cold periods than seen [in] the last several winters. If this winter indeed reaches coldest-of-decade status, then it will also be colder than any winter in the 1990s or the mid-to-late 1980s as well (national basis),” said Matt Rogers, CWG’s president.

According to Rogers, the key is the development of an El Nino that is neither too weak nor too strong. The ideal range is an El Nino that shows warming of Pacific Ocean waters in a range of 0.5 to 1 degree Celsius above normal. “The Pacific has been in that category consistently since June. A few weeks ago, some in the weather community believed that the El Nino may fade back to neutral status due to weakening signals. Now in the past week, the thoughts have shifted in the other direction as a burst of stronger subsurface warming is working upward into the key region tracked for El Nino status (called NINO 3.4). The oscillations to either side seem to be effectively keeping the El Nino exactly where it needs to be to support a colder-than-normal North American winter.”

©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.