Despite moderating temperatures and tumbling electric prices,natural gas futures continued to climb yesterday, punching throughstubborn resistance amid new speculative length and renewedconcerns that storage inventories are too low. Easily outpacing itsprior life-of-contract high at $3.24, the June contract rallied13.4 cents higher to finish at $3.317. In doing so, futures reachedtheir highest mark by a spot contract since November 1997.

“We saw good fund buying in the morning and short-covering inthe afternoon,” said Houston-based risk manager. “The storagereport gave bulls a solid boost [yesterday.]”

According to the American Gas Association, 58 Bcf was injectedinto underground storage facilities last week, bringing the totalworking gas to 1,117 or 34% full.

“While not totally unexpected, storage fell short on two countsyesterday — it was less than both last year’s 72 Bcf injectionand the 6-year average of 71 Bcf,” he continued.

The year-on-year deficit is now 363, but more alarming to manytraders is the growing 6-year average deficit, which grew to 64 Bcfyesterday. In January, storage was at a 322 Bcf surplus to the6-year average.

To make matters worse, some traders are already fretting overnext week’s storage announcement, which they feel will show asmaller build than 58 Bcf. Injections this week have had to competewith heavy cooling demand across much of the East Coast. We will belucky to see a 50 Bcf refill next week, another trader said.

However, it appears the worst of the summer’s first heat wavehas come and gone, at least for the Mid Atlantic and Northeast,which is expected to cool off over the next week. According to thelatest six- to 10-day forecast put out by the National WeatherService, seasonal temperatures are expected to return to a largeswath of the country from the Northern Plains, across theMississippi and Ohio River Valleys to include the Mid-Atlanticstates. At the same time, forecasted below-normal temperatures willbring a dramatic change from the record-setting heat in theNortheast over the last several days.

Looking ahead, traders agreed the technical picture is a bitnebulous since there is very little at this altitude on the charts.In addition to the psychologically important $3.50 level, tradersare watching a layer of Fibonnaci resistance at $3.37.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.