Despite a disappointing storage report and continuedabove-normal temperatures across the country, natural gas futuresbubbled higher yesterday as technical traders found good value inprices near the bottom end of the recent trading range. And byadvancing 6.2 cents to settle at $1.837, the March contract notonly washed clean Wednesday’s declines but also positioned itselfback in the middle of the $1.725-925 trading range. Estimatedvolume was a somewhat lackluster 61,716 contracts.

Traders said short-covering, following Wednesday’s slide andahead of the long holiday weekend was a major factor in themarket’s strength yesterday. The market will close tomorrow at 1p.m. E.S.T and will not reopen until 10 a.m. nest Tuesday.

Looking ahead, Tim Evans of New York-based Pegasus EconometricGroup thinks the short trading day and long weekend could influencethe market in one of two ways. “The futures market could trendlower in sympathy with cash market prices, which will see lowerdemand [Friday] due to the short consumption week.”

Although Evans gives that a 50% or greater chance of happening,he does not rule out the possibility of the market bucking thetrend tomorrow. “What happens if we break the pattern in such a waythat we finish at or above recent highs in the $1.85-86 area? Thatwould leave the door open for a large bid to come in Tuesdaymorning to create a gap higher on the charts. The market would thenhave covered a lot of territory over a relatively short time frame,which could spark some additional short-covering from speculativeplayers.

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