Building on modest short-covering related advances achieved Friday, natural gas futures plowed higher yesterday as traders returned to the office to find that meteorologists had not backed away from their forecasts calling for hot temperatures across an extended area of the country over the next 10 days. With that, the September contract took over as the prompt month at Nymex with a neat, 15.9-cent gain to close at $3.353.

According to the latest six- to 10-day forecast released Monday by the National Weather Service, above normal temperatures are expected across roughly three-quarters of the country this weekend and early next week. Most conspicuous in this large area of above-normal temperatures is the upper Midwest and the Northeast. Because those areas have experienced relatively mild summers thus far, both cash and futures traders are interested to see how gas demand and storage injections will be affected by the rising mercury.

However, next week’s forecast was not the sole market-mover yesterday. Also having an impact were short-lead forecasts, which jibe with similar outlooks issued last week calling for hot temperatures. The Midwest is expected to heat up today as maximum temperatures boil well up into the 90s over the western portions of the region and adjacent Great Plains. An excessive heat watch has been posted for Chicago. A strengthening hot, high pressure ridge in the upper atmosphere can be labeled as the villain, the NWS said.

Another factor in yesterday’s price rally were rumors of a tropical wave located in the Caribbean, sources said. However, as of press time last night no formal warnings or advisories had been issued by the National Hurricane Center.

On the technical side of the futures market, September made points with bulls by gapping higher on the open yesterday and moving up near the yet-to-be-filled chart gap up to $3.43. However, for Cynthia Kase of New Mexico-based Kase and Associates the bullish proof will come only on a break of $3.55, which lies just above September’s $3.51 spot high from July 12. “The technicals are showing that while the market is looking for bullish news, it has not yet found sufficient ground for a bull run. If such a run takes place, which currently carries 33% odds, look for a close over the upper boundary ($3.55) and a run to $3.80, with a possible continuation on to $4.40.”

Support, on the other hand, is seen first at $3.05 and then again at last week’s low of $2.95. A break beneath those levels could trigger a move to $2.80, she said.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.