Light short-covering gently prodded the futures market higheryesterday as traders surveyed the prospect of a sizable storagewithdrawal reported in the American Gas Association’s storagereport this afternoon. The prompt February contract led all others,advancing 4.2 cents to settle at $1.821. With that small gain, themarket ended a five-day, 25-cent slide.

In addition to storage considerations, traders said alate-morning “pop” in cash market prices was a contributing factorto the futures strength. “People sold early hoping to pick upcheaper supply late, but there was little gas available and pricestrended higher into [nomination] deadlines.”

Looking ahead the futures market might not be able to rely oncash strength for too much longer. The National Weather Servicereleased its latest six- to 10-day forecast Monday, which calls forabove- and much-above-normal temperatures by the weekend for theentire lower 48 states.

Although the Pegasus Econometric Group remains bearish based onthe weather, it does not rule out the possibility of a short-termrally in sympathy with a large storage draw-down today. “We remainconcerned that a drop in the year-on-year storage surplus from lastweek’s 606 Bcf tally to something closer to 450 will create someupside volatility, but as traders shift their gaze to the future,they’ll see warmer temperatures and lower heating demand ahead.”

If the market does trend lower, support exists first at the$1.71-72 level ahead of a continuation chart low at $1.63.

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