Buoyed by strong demand for physical supplies and aggressivebuying under last week’s price chart gap, the natural gas futuresmarket continued to whittle away at last week’s collapse. Theremaining three months of the millennium received almost equalbuying interest Tuesday, with October, November and Decemberadvancing 11.6, 11.9, and 11.6 cents respectively. Estimated volumewas hefty, with 81,210 contracts changing hands.

Local traders couldn’t pass up this cash market-driven drivenrally, noted Ed Kennedy of Miami-based Pioneer Futures. “Localswere gunning for [buy] stops and also were trying to fill in thechart gap from last week,” he explained. An enormous chart gap wascreated between Wednesday’s $2.71 low and Thursday’s $2.63 high onthe move lower last week. Commercial traders were also activebuyers and by early Tuesday evening the market had posted a $2.698high in the Access trading session, nearly filling in the gap.

Looking ahead, Kennedy doubts the market can sustain thestrength heading into this afternoon’s release of fresh AmericanGas Association Storage data. “Bearish any way you slice it,” saidKennedy, who looks for a 56 Bcf injection to apply downwardpressure when compared with last year’s meager 35 Bcf refill. “Idon’t expect the speculators to hold onto longs ahead of thatreport [Wednesday].”

However, if the market is able to move lower today ahead of thestorage report, traders will have to put their hurricane anxiety onhold. Just a couple days after Tropical Storm Dennis made landfallin North Carolina, the tropics are active again. The NationalWeather Service (NWS) yesterday was issuing several advisories ontropical systems-two waves in the North Atlantic and TropicalDepression Seven located over Northeastern Mexico about 70 mileseast of Ciudad Victoria, Mexico. The Depression is expected tocontinue to the west-northwest and bring heavy rains to Texasbefore dissipating in a day or so, the NWS said.

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