After a lower open natural gas futures quickly tested thedownside Friday, but the selling dried up, which uncovered someposition squaring into the weekend. With that the January contractwas able to break its string of losses after three days, finishingup 1.8 cents to $1.858. Estimated volume was a light40,799contracts.

In addition to short-covering ahead of the weekend, sources alsopointed to relative strength in the cash market. “Cash startedlower and worked its way up from there. Each time I got on thephone prices were 2 cents higher than the time before. This was ashock to some, who were looking for a repeat of last Friday’s falloff.”

Another source said weather forecasts calling for anothercool-off by the end of this week made some traders reluctant tosell ahead of the weekend. “I think a lot of people decided to siton their hands and have a look at the revised forecasts Monday tosee when and if temperatures are going to return to normal,” hesaid.

And when will that winter weather materialize? Fred Gesser ofOmaha-based Strategic Weather Services says maybe in time forChristmas. After the short warm-up many areas of the Midwest andNortheast experienced over the weekend, Gesser looks for a returnto “high normal temperatures” (5 to 6 degrees above-normal) forthose areas by the end of this week. However, he is watching adeveloping area of extremely cold air centered in Northwest Ontarioand the Northwest Territory. “A few models call for that swath ofcold air to persist and even intensify, which could bring apipeline of Arctic air into the Central and West-Central U.S. intime for Christmas. The big test will be whether that air will thenmove to the East,” Gesser said. “If it does then we could belooking at slightly below-normal temperatures to usher in the newyear. And those temperatures, although seasonal, will be anoticeable change from the record setting high temperatures of justa week ago.” Meanwhile, “how mild has it been? I can’t remember thelast time there was not one inch of snow pack in Marquette, MI;Sault Ste. Marie, ON; and Caribou, ME on Dec. 15.”

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