The futures market continued to spike higher at Nymex yesterday,adding to advances that have lifted the October contract 36.3 centssince last week. October finished the day up 11.8 cents to settleat $2.241. In doing so, natural gas futures set a new daily volumerecord with an estimated 142,867 contracts changing hands.

Tom Saal of Miami-based Pioneer Futures noted a difference inthe urgency of buyers from Tuesday to Wednesday. Whereasshort-covering was driving the market Tuesday, on Wednesday themarket experienced fresh buying from would-be longs who were anotably less aggressive than their Tuesday counterparts. Thathighlights the difference between buying when you need to get out,and buying when you want to get in, he continued.

However, if you don’t like the price of natural gas, then wait aminute-or at least wait until the next AGA storage report releasedeach Wednesday. That report, featuring a larger-than-expected 70Bcf injection total was met with immediate selling pressure in thecomputer trading session last night. As of 7 PM EST the promptcontract had slipped 6.6 cents to 2.175.

Looking ahead, a New Jersey-based analyst is not convinced ofthe existence of an uptrend quite yet. “Sure the price movement hasbeen significant, but you can’t establish a trend withoutsupporting fundamentals. Some traders are pointing to the storms inthe Atlantic and Gulf [of Mexico], but this continues to be acorrective rally initiated by bullish technicals. Now, the questionbecomes if the market has over-corrected to the upside.”

Saal thinks the answer to that question could be “yes.” Andlooks for a retracement lower, possibly testing support in the$2.07 area. However, if the market could bounce off support totrend higher, that would be very positive for the bulls. “Untilthen, all we have is fund activity pushing the market into thestratosphere, which is does not necessarily constitute a uptrend,”he said.

©Copyright 1998 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.