Tired of watching natural gas futures spiral lower over the last couple of weeks without much respite, traders pushed the November contract higher Friday in what market watchers were calling a short-covering rally. After putting in a high of $5.735, the prompt month closed out the week at $5.620, up 22.8 cents on the day but 26.1 cents lower for the week.

The week also saw the expiration of the October contract Wednesday, which plummeted to $4.070 — marking a new low for the extended move — before expiring at $4.201. The last time a prompt month traded lower was all the way back on Nov. 15, 2002, when the December 2002 contract reached a low of $3.900.

As for Friday, the market’s general sentiment appeared to be that it was about time for a rally. “Are you really surprised?” queried Tom Saal, a broker with Commercial Brokerage Corp. in Miami. “We have been trending down pretty hard for two good months without any kind of real rally or retracement, so this market was definitely due. I think all we saw Friday was just a bout of short-covering ahead of the weekend.”

However, Saal allowed that Friday’s action could be the beginning of something. “You can only pound this thing lower for so long before the people who sold into it decide they want to exit,” he said. “I think they might try to test Friday’s highs early next week just to see what happens. On the fundamentals front, with storage above 3.25 Tcf and weather in the Gulf of Mexico remaining quiet, it would appear the only hope bulls have right now is if we got some colder than normal weather in here in the coming weeks.”

Following the Energy Information Administration’s 77 Bcf storage injection report Thursday for the week ended Sept. 22, working gas levels now sit at 3.254 Tcf with five weeks remaining in the traditional injection season. However, the injection was well shy of industry estimates in the 85 Bcf area. The bears paused momentarily following the report. “When the number came out, the market didn’t budge. The market traded within a 5-cent range and just wouldn’t move,” said a New York floor trader. He added that later in Thursday’s trading session the market started falling, and “once November fell below $5.50, it came off quickly.”

The trader said that “with no demand in sight,” he was expecting even lower prices over the next two weeks. He added that talk on the floor was for November to test $4.50. With “a couple more builds like this week and no demand, where is the gas going to go?” The market will “probably hit $4.50 if not lower,” he said.

Natural gas bulls may find some solace in a stronger petroleum market. According to a Bloomberg survey, 17 of 42 analysts, or 40%, said prices will rise this week. Fourteen analysts forecasted that prices will fall, and 11 predicted little change.

Tropical Storm Isaac, the ninth named storm of the season, has formed in the central Atlantic. Isaac has been continuing on a northwesterly track since forming, but an approaching trough will steer this storm away from the mainland U.S., forecaster AccuWeather.com said.

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