Constructive

Led by follow-through buying, record-setting heat out West, anda constructive over-the-counter market, natural gas futures eruptedhigher at the open yesterday as buyers propelled the market to newthree and a half year highs. The rally was short-lived, however,and after posting a $3.985 high during the first hour of trading,the June contract tumbled lower under a wave of selling pressure tofinish at $3.747, down 7.8 cents on the day. Estimated volume wasextremely heavy, with 134,429 contracts changing hands.

Despite constructive gains in both the cash market and crude oilfutures market and following a string of gains in seven of the lasteight trading sessions, natural gas futures gave back a nickelyesterday as traders weighed in on the extremely technicaloverbought condition that existed in the market. And althoughTuesday’s modest retreat did little to satisfy those overboughtconditions, analysts question how much further the market will fallbefore buyers step back in.

Despite bullish over the counter dealings and a constructiveopening, the natural gas futures market shuffled lower Monday asshort-term traders sold off newly acquired long positions. TheNovember contract notched a $3.02 high shortly after the open thenproceeded lower to its $2.86 low for the session. A late rallybolstered prices near the closing bell to $2.92, a 5.5-cent loss onthe day.

Fueled by strong cash prices, a constructive technical picture,and lingering storm concerns the natural gas futures market wasquick out of the gates yesterday as traders lifted the market toits highest point in over a month. However, the buying pressuredropped off as November prices crossed the $3.00 threshold, whichprompted participants to trim gains into the close. After notchinga $3.03 high, the November contract finished at $2.97, a 4.3-centadvance on the day.

Bolstered by strong cash prices and constructive technicals, thenatural gas futures market bubbled higher yesterday as locals bidprices higher in light Columbus Day trading. And by finishing at$2.825, the November contract fell just a penny short of its $2.835high for the day and several cents below key resistance at the40-day moving average. Estimated volume was light, with just 60,947contracts changing hands.

A constructive price move near the close of trading Tuesday anda well-bid over-the-counter market Wednesday morning had bullschamping at the bit early yesterday. But by afternoon, forecastscalling for a moderation of the cold weather gripping much of themiddle of the country had begun to filter through the futuresmarket which left prices to trickle lower. Both the December andJanuary contract slipped 4.6 cents, settling at $2.432 and $2.557respectively.

A combination of stronger cash prices met with and conspiredwith constructive technical factors to lift the futures market forthe 4th straight day Tuesday. November managed a 5.9 cent rally tosettle at $2.202, but the big news of the day centered on the outmonths which posted similarly impressive advances, bringing the3-month strip up 6 cents. Estimated volume was a healthy 69, 463 onthe day.