Fueled by the fundamental one-two of bullish storage and weathernews, the natural gas futures market rose Thursday as tradersunloaded shorts and added to longs. After dropping a dime lowerWednesday, the January contract opened higher at $2.53 Thursday andnever looked back as prices climbed into the mid-$2.60s. The promptmonth finished near its daily highs, up 15 cents to $2.636.

A Houston trader was quick to point to concerns that storage isbeing depleted too quickly. “It’s not that it was a abnormallylarge number, but it came during a period when temperatures wererelatively mild,” he said. The American Gas Association reportedWednesday 73 Bcf was withdrawn from underground storage facilities.And while that draw was less than the 5-year average, it easilyeclipsed last year’s 49 Bcf figure and raised the oft-quotedyear-on-year deficit to 196 Bcf.

The National Weather Service released a bullish report of itsown yesterday. Almost the entire southern two-thirds of the countryis expected to see below normal temperatures next week.

However, fundamentals were not the sole reason for the market’sstrength. Ira Hochman of New York-based Trot Trading Corp., hasbeen confident of the market’s strength ever since it broke the$2.36 level. “What we are doing is setting up a textbook islandreversal pattern. We gapped lower on the way down from $2.67 to$2.655 last month, now we are moving back up through that level. Iwouldn’t be surprised to see prices gap higher tomorrow above$2.67. That would be very bullish.” And if the market is able toadd to its gains today, Hochman believes it will face another testat $2.79, which is a key level generated by his Market Profilesystem of technical analysis. Another key technical level that willlikely come into play today is the 40-day moving average forJanuary at $2.673.

©Copyright 1999 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.