Fueled by the East’s worst winter storm in four years, naturalgas futures erupted higher at the open yesterday as tradersestablished new longs with confidence.

The February contract gapped higher at the open and never lookedback, notching a $2.63 high before settling at $2.616, up 8.8 centsfor the session. In addition to the tremendous Nor’ Easter bearingdown on the East Coast, traders pointed to storage, strong cashprices and plain old market momentum as reasons for the price rise.

“All news is good news for prices right now,” assessed aHouston-based trader. “Crude oil is moving higher, cash prices areup and it’s cold where it counts. Throw in the possibility of amore than 200 Bcf pull from storage in [today’s American GasAssociation Storage report,] and all the ingredients are there forhigher prices.” he continued.

However, Tom Saal of Miami-based Pioneer Futures downplays theimportance of the storage report and focuses on momentum andweather. “I have storage coming in at a 184 [Bcf withdrawal,] butit will take something more than 220 [Bcf] or less than 150 [Bcf]to surprise this market. The sizeable withdrawal was factored intoprices last week and [Tuesday.]

“In the near-term the momentum is clearly the key. Somethingwill have to happen to turn this thing around.”

The most likely candidate to turn prices around is moderatingweather, he continued. “This market continues to beone-dimensional. If temperatures in the Northeast and Upper Midwestwarm up, prices will cool off in a hurry,” he added.

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