Following on the heels of Thursday’s measly one-day, 0.2-cent price retracement, natural gas bears were up to their old tricks Friday as they pressured the futures market to a gap lower open on the daily charts. However, that would prove to be just about the extent of the selling because prices were able to ratchet higher from that point forward as traders covered shorts amid constructive weather outlooks. The October contract finished 1.5-cents weaker at $2.38 in holiday abbreviated trading.

For futures traders and market watchers, Friday’s early close was an opportunity to look back at a tumultuous month of trading activity. After being held to a tight, 52.5-cent range during the month of July, the spot contract soared and dipped during August, carving out a wide $1.35 trading range. But while the market’s volatility had changed markedly, its result was still the same–prices continued to fall during the month. All told, the October contract slipped 96.1 cents during the month.

Now that futures prices have returned to levels seen before the energy calamity of 2000, traders are on the watch for clues that the market is bottoming out. While not endorsing liquidating your shorts quite yet, Tom Saal of Pioneer Futures in Miami notes that the market spent very little time near its lows Friday. “We saw a really good bounce [Friday] morning and that shows that the buyers are willing to step up.”

According to the latest six- to 10-day forecast released Friday by the National Weather Service, the Northeast and Upper Midwest can expect above-normal temperatures this week, while the western U.S. will see below-normal readings. On balance, traders agree that this weather outlook favors bulls, as the warmer-than-usual temperatures will increase gas demand for electric generation.

Also of bullish impact Friday was the formation of a tropical wave in the far eastern Atlantic Ocean. Although still poorly developed as of press time Friday, the system had potential to strengthen, according to the National Hurricane Center. If the system is able to mature into a tropical storm, it will be called Erin.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.