After a lower open, natural gas futures clawed higher Tuesday astraders looked past falling physical prices to side withconstructive long-lead weather outlooks and bullish storageexpectations. The February contract gained 13 cents to close at$9.819, but the real news of the day was buying in the out-months,which enabled the 12-month strip to advance 18.1 cents to close at$6.63.

While bull traders were encouraged by yesterday’slower-to-higher price action, bears took solace in February’sinability to punch through stubborn resistance at $9.87 for thesecond day in a row.

Looking ahead, natural gas futures traders were doing their bestrendition of weather watchers again Tuesday as they tried to gleanwhat the weather for the middle of January will hold. While theNational Weather Service’s six- to 10-day forecast still calls forabove-normal temperatures across the Northeast, Mid-Atlantic andparts of the upper Ohio River Valley and upper Midwest, its 8- to14 day outlook shows a return to normal temperatures for thoseareas.

Looking ahead, New York-based IFR Pegasus is solidly bullishover the long haul, but admits there could be some bumps in theroad. Despite the bullish impact of a likely 160-180 Bcf withdrawalthis afternoon, the group cautions that year-on-year storagecomparisons going forward will have a difficult time stacking up tothe hefty withdrawals seen a year ago. “This may prevent the marketfrom spiraling higher or even inflict a downward correction on themarket, depending on the context of the price action that precedesit.”

The group is on the sidelines right now, but looks toreestablish long positions with buy orders at $9.12 and $8.62. “Wedo half positions at each level, with a $7.95 sell stop to limitthe damage of the full amount,” the group advised.

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.