Some would say that bull traders have endured a year’s worth ofbearish price news already this year as consistentlywarmer-than-normal weather forecasts each Monday have been followedby lower-than-expected storage withdrawal figures Wednesday. Thisone-two combo has done a number on natural gas prices, which haveplumbed to near-record lows amid almost non-existent volatility.But for at least a day, that was a distant memory Monday asshort-covering, egged on by a slew of fundamental and technicalfactors, buoyed the prompt-April contract 7.3 cents to $1.701.

Technical factors got a jump start on the week when theCommodity Futures Trading Commission released its latestCommitments of Traders Report last Friday (see Daily GPI March 1).The report showed non-commercials (fund groups) were short morethan 30,000 in open interest as of Feb. 23. And although that largeshort position is bullish in its own right, a Houston trader feltit was the complementary effects of weather and cash prices thatput the wheels in motion. “Some were calling for a gap lower on theopen [Monday], but few expected this. Cash prices were strong rightoff the bat, and the forecasts calling for cooler temperatures thisweekend got some shorts to cash in on their positions.”

But don’t get too carried away, he warns. “What we have is a 72hour period of positive news leading up to the American GasAssociation Storage report Wednesday. I would not be surprised ifthe AGA showed a withdrawal of 115 [Bcf] or greater. After thatreport has been digested, however, it is possible the market couldretest the lows in the $1.63-64 area,” he reasoned.

A California marketer agreed, adding that it would take a moveback above $1.80 to really get him to reevaluate his shortposition.

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