November Henry Hub futures burst through the 40-day movingaverage at the open yesterday and never really looked back. Aftercrossing $2.859, speculative fund buyers jumped in, sending thecontract 10.2 cents higher for the day to $2.927/MMBtu. Decembergained 10.7 cents, settling at $3.120. January jumped 9.9 cents to$3.130, and February moved up 7.2 cents to $2.945.

“Buying really kicked in when [November] got to the $2.855level. That was the low for the day. The funds came in and boughtit,” said Ira Hochman of New York City-based Trot Trading Corp.”But I thought today was a day I really had to be a little bit of aseller out there,” he said. “You had to get out of your longs upthere: anywhere from $2.95 and $3 is giving you good resistance. Imean it’s a big area. If it takes out $3.005, I’d look to buy somethere and buy some on a dip, but until it takes out any kind ofhigh, you have to get out near it.” The $3.005 resistance level isthe high that was set on Sept. 27.

Hochman does see some pent-up demand remaining behind thisrally. November’s range for the day was $2.855 to $2.965, so itsettled 3.8 cents off its daily peak, which is bullish, he noted.”The day structure was good. It had a pretty decent close. We’llhave to see how it acts in the morning. There’s always time to buyback,” he added.

“It seems unusually strong. It really does. What you need to dois wait until it takes out the $3.005 and pulls back a little bit.Let the market churn around between the $2.80 to $2.95 level, andthen you buy them. I think if we stay above $2.78 we’ll be okay.”Hochman predicts if there is a drop today, it probably will hold inthe $2.80s and then retest $3. Otherwise, he sees continuedstrength above $3 followed by a dip back into the $2.80s. Futurescontinued to rise in Access trading yesterday evening with Novemberreaching $2.974 by 6:16 p.m.

Some fundamentals are looking favorable for additional futuresprice support. Heating demand is scheduled to pick up in theMidwest and Midcontinent, according to the latest National WeatherService six- to 10-day forecast, which shows below normaltemperatures for those regions. Above- normal temperatures areforecast for the Pacific and Atlantic coasts. Meanwhile powergeneration demand has been strong in the Pacific and Southwestregions due to transmission constraints, nuclear outages andcontinued heat.

However, storage levels could be the deciding factor in marketmomentum. If the American Gas Association reports today that theindustry put more than 65 Bcf of gas in the ground last week,storage levels would move above last year’s extreme highs, whichcould have a bearish effect on the market. According to the AGAreport for the week ending Oct. 1, storage is kind of straddlingthe fence right now by being both less than last year’s loftyheights and more than average levels over the past five years.Injections during the second week in October last year reached 41Bcf. The five year average for injections that week is 50 Bcf.

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