Just as it has done in six of its prior seven trading sessions, the November natural gas futures contract rebounded off a low in the $4.10s Wednesday as bargain buyers came out of the woodwork. Although it didn’t quite become the feeding frenzy it was on Monday, the buying Wednesday was consistent enough to subvert a late morning push down to Tuesday’s price levels. November finished the session at $4.26, up 15 cents for the session and just about in the center of its recent $4.08-42 trading range.

One thing that is becoming more significant in the futures market is the declining number of large commercial players, said local trader Eric Bolling. “You continue to see a few players push this thing around. With more and more big commercial accounts getting out of trading, the ones that remain are having a huge impact on the market. On Monday, we saw that with American Electric Power covering their front-month shorts. Today it went both ways with big guys on either side trying to shake each other out of their positions.”

Although he admits that hurricane related shut-ins and the cold weather across the country could not have come at a better time for bulls, he insists that the market has moved higher because it was technically inclined to do so. “This market has made a series of higher highs and higher lows. Each time support has been tested, it has held. The buyers are out there, and they are willing to buy the dips…. [Doing so] has rewarded them thus far.”

Looking ahead, Bolling believes it will be healthy for the market if prices continue lower and even breach the $4.00 level. He looks for softening Thursday morning if the storage report does not contain a bullish surprise. Expectations ahead of the report are calling for a 15-30 Bcf net injection. If realized, a number of that magnitude would fall short of last week’s 48 Bcf refill and just shy of last year’s 32 Bcf addition. Storage currently stands at 3,128 Bcf, or 60 Bcf above year-ago levels and not far from the American Gas Association’s long-standing estimated full capacity of 3,294 Bcf.

However, any price softening Thursday will represent an excellent opportunity for bargain hunters, Bolling added. “That consolidation, on top of the consolidation the market has already experienced in the $4.10-20s range, will set the stage for a strong rebound that could likely bring the prompt month up to the $5.00 level at some point this winter.” As long as it holds support in the $3.90 area, this market remains a buy in the long-term, he said.

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