Fueled by what one veteran trader called one of the mostdramatic price moves in the history of the natural gas market,futures prices rallied Monday as the prompt January contractsettled up 12.3 cents to $2.101. But that daily change paled incomparison to the enormous advances seen in the cash market wheredaily gains registered more than a half-dollar for many pipes.Forecasts calling for cooler temperatures for most of the countryand undervalued cash prices were reasons for the market strength,sources agreed.

“We knew there was the need for some convergence, but this wasridiculous,” quipped a Houston-based trader referring to the nearone-dollar premium futures held over cash last week. “The [cash]market shot back up twice as fast as it came down last week. Surethe market was under-priced in the low $1.00s, but nobody expectedthis.”

Despite the constructive cash market news, many sources are notready to acknowledge the end of the downtrend in gas futures yet. ANew Jersey analyst feels yesterday’s move represents an obviousselling opportunity. Cash prices rallied some 60-cents [Monday] andall futures could manage was a 12-cent gain. That’s not veryreassuring. Plus, traders were unable to fill in the chart gap,” hesaid referring to the gap created last Monday between $2.19 and$2.06.

And although the short-term forecasts call for normal, andtherefore generally cooler, temperatures across most of thecountry, the National Weather Service (NWS) six- to 10-day forecastcalls for a return to above- and much-above-normal temperatures formuch of the Great Plains and Midwest by the weekend. Only the EastCoast is expected to see below normal temperatures, the NWS said.

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