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Short-Covering Lifts March to ‘Promising’ Start
Natural gas futures closed higher after a weak start yesterdayas traders were able to look past the dismal fundamental outlook tofocus on the short-covering activity at hand. That lifted the Marchcontract a modest 3.4 cents to finish at $1.86 on its first day asthe prompt month.
But the market advances were not limited to only the Marchcontract. Noting an almost uniform 2-3.5-cent increase in contractsextending to 2001, a trader said active strip buying helped boostthe outer months.
The Pegasus Econometric Group of New York remains bearish on theweather but warns people not to miss the big picture. “Theyear-on-year surplus is still much lower than it was in Decemberand there are plenty of speculative shorts on hand. Both of theseconditions leave natural gas vulnerable to a change in the weather,which may not have emerged yet, but inevitably will,” the groupwrote in its Jan. 28 Natural Gas Report.
However, a Houston marketer points to a long-lead governmentforecast, which calls for a dramatic dip in the jet stream aroundFeb. 10th. “They have thrown everything but the kitchen sink atthis market and it has refused to go lower. What will happen whenthe weather actually materializes?” he asks.
If the market trends higher, March will meet resistance at $1.93ahead of the $2.00 level, Pegasus said. Support, they feel, existsat $1.73.
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