Propelled by follow-through buying on the heels Wednesday’sbullish storage report, natural gas futures shuffled higheryesterday, as traders looked past the expiring August contract tofocus on the out months.

After notching its highest price thus far this week at $3.87,the August contract slipped into its final resting place at $3.82,a 5.7 cent advance on the day.

Although one would expect the prompt month would take centerstage on its expiration-day, that was not the case yesterday. As itturns out, the real story was the winter strip and calendar year2001, which rumbled convincingly higher despite the modest gains inAugust, September and October of 2000. The five-month winter stripadvanced 7.4 cents to $3.935 while the 12-month strip for 2001traded up 8 cents to finish at $3.664. Comparatively, the rest ofthe summer of 2000 could muster only a 5.3-cent gain.

Several sources contacted by NGI were still a little stunned bythe relatively small injection figure released Wednesday by theAmerican Gas Association. According to the AGA, 54 Bcf was injectedinto underground storage facilities last week, bringing the totalworking gas to 1,857 Bcf. While that refill was more than the 41Bcf seen this time last year, it fell significantly short of the60-80 Bcf expected and of last week’s 70 Bcf build.

“This market was very sensitive to a bullish number,” explainedGeorge Leide of New York-based Rafferty Energy Group. “We had anice sell-off earlier in the week, but support in the $3.50s held.All the bulls needed was the go ahead from storage, and that’sexactly what they got.”

Turning his sights to September trading, Leide sees supportfirst at $3.71 and then again in the $3.50-57 area. “You have to bea buyer on a move into the $3.50s. The closer you can get to $3.50the better. However, if this thing breaks $3.45, all bets are off.Exit all longs,” he warned.

On the other hand, Leide believes the market’s upside could belimited by a steeply sloped downtrend line, which for today’ssession comes in at $4.02, and is falling at the rate of about 3cents a day. If the market can punch through that level, therecould be additional selling at the July 17-18 break-away gap lowerat $4.11-11.5.

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