Fresh off a two-day, 24-cent price drop, natural gas futurestraded unchanged for most of the session Tuesday with light buyingand selling by trade accounts matching up nearly perfectly. Bymid-afternoon, however, it looked as if bears would make it atrifecta, as they successfully etched new lows for the Januarycontract down to $2.21. But after remaining on the sidelines formost of the day, speculators were seen as aggressive buyers intothe final bell. That enabled the January contract to finish on apositive note, up 4.7-cents to $2.271.

Tom Saal of Miami-based Pioneer Futures attributed thelate-session strength to a combination of short-covering andstop-loss order hunting by prominent locals who have been mostlyquiet this week. “Sandy Trot was the ringleader on the floor today.He and other locals were seen gunning for buy stops above $2.26.And those gains appear to have spilled over into Access trading,’Saal said.

He also pointed to cash prices, which seemed to defy gravity andtrade above index, albeit only slightly, again yesterday. DailyGPI’s Henry Hub index for today is a $2.16, two cents about firstof the month levels. Because the market has exhibited such strengthwith little or no weather in key gas consuming areas, Saal believesprices will move abruptly when cold temperatures return.

A Houston trader disagrees and cites potential supply in theform of underground storage as a spoiler. “I would be surprised ifvery much gas was coming out of the ground right now. It does notmake sense for people to recognize the cost of their storage gaswhen the replacement price is so much less. They would be betteroff just buying gas in the spot market and praying for colderweather,’ he reasoned. “The longer the market waits to pull thatgas out of the ground, the faster and more depressing effect itwill have on prices,” he continued.

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