Volatility continued at the Nymex Tuesday as natural gas futures prices plodded higher in sympathy with surging prices in the nearby crude oil pit. After an initial push to the downside failed to crack the $4.70 level, local traders were active buyers and had little trouble goosing the prompt month into a healthy, late-day rally.

December closed at $4.865, up 10.1 cents for the day. At 82,930 estimated volume was heavy for the third-straight session.

Traders were quick to point to crude oil futures as a primary driver in the natural gas rally. Fueled by rumors of a tanker spill in New York Harbor and in reaction to bullish comments made Monday by an OPEC minister, the prompt crude contract rallied to new eight month highs at $33.28, up $1.55 on the day.

Also contributing to the rally were technical factors, chipped in Tom Saal of Commercial Brokerage Corp. “We pivoted off the $4.72 level and locals ran the market higher. All the bearish news is in the market and prices have failed to drop lower. The risk is to the upside.”

Should the market continue higher Wednesday and take out Tuesday’s $4.885 high, Saal projects a Market Profile 50% range extension to the $4.985 level. Additional selling would be likely in conjunction with the psychologically important $5.00 mark.

Craig Coberly of GSC Energy in Atlanta agrees with Saal’s bullish optimism, providing the market can hold at or above Gann support, which for the January contract was seen at the $4.84-85 level. The Gann line has a moderate slope of a quarter-cent a day.

Though teeming storage inventories remain a factor solidly in bears’ favor, the first withdrawal of the season could bring out some buying interest. Early expectations call for a 10-27 Bcf net withdrawal, which would fall in line with the 18 Bcf five-year average takeaway.

However, all this bullish euphoria will meet with considerable resistance if weather remains mild. The National Oceanic and Atmospheric Administration will update its monthly and 3-month forecasts Thursday, setting the stage for a large move in either direction.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.