What a difference a day can make. Just 27 hours after testingkey support at $2.81, natural gas futures staged a completeturnaround, rallying to its highest daily continuation chartsettlement price this year. Nearly non-existent fundamental factorsgave traders little choice but to rely again on technical tradingtools for price direction. After the May contract posted animpressive gap higher open, that direction was in little doubt. Theprompt contract finished up 6.8 cents at $2.956, just a fraction ofa cent off its $2.96 high and within a nickel of its $3.005all-time high.

A chance of snow exists today in Chicago, but that was secondaryto a risk manager there who feels it is only a matter of timebefore the market retests the $3.00. “There will be some selling asyou approach $3.00. However, if the market can punch through thatlevel, there is very little in the way of resistance until you hit$3.12.” In addition to the psychological resistance at $3.00, thereis additional resistance at prior highs of $3.005.

Although technicals have been dominant lately, a Houston traderwas impressed by activity of cash prices over the last few days.”The tiger really showed its stripes [Wednesday]. Even while futureswere trading down in the low $2.80s, prices for premium Louisianapoints refused to give up. Henry Hub, Transco and Texas Gas allheld near index their first-of-month indexes in the upper $2.80s.With cash prices holding strong, futures had to come up,” he said.

Looking ahead, he believes the market will be eager to make itsfirst stab at $3.00, “probably this morning” in follow-throughbuying on the heels of Thursday’s strong settlement. In dailytechnicals support exists at the aforementioned chart gap betweenWednesday’s $2.90 high and Thursday’s $2.92 low.

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