Feeding off gains notched in the overnight Access trading session, the natural gas futures market was able to string together another positive trading session Tuesday as early short-covering led to new highs for the week. Steady selling was seen throughout the afternoon, but it was not enough to pressure the market below unchanged on the day and the October contract finished with a 1.7-cent advance at $4.511. At 77,470, estimated volume was strong considering the narrow 11-cent trading range.

Heading into the session, market watchers were aware of the possibility for higher prices. After breaking below key support at $4.55 last week, the market failed to sustain much follow-through selling, suggesting that a bottom may be in place. That idea gained momentum Tuesday when traders watched as the October contract rallied to close above the settlement prices notched both Friday and Monday. “That is a textbook reversal right out of Murphy’s book on technical analysis,” said Tom Saal of Commercial Brokerage in Miami. “The market made a new low for the move last week and then rebounded to settle [Tuesday] above the settlements of the prior two sessions.”

Saal went on to note that the market is oversold on both daily and weekly charts. That, combined with the looming net short position held by the non-commercial segment of the market, has market-watchers cautious of a short-covering rally. “The professional speculators are short more than 32,000 positions and now that prices have stabilized and are beginning to drift higher, their trading programs will start to put out buy signals,” Saal said.

Should the market require a fundamental boost to get it moving higher, traders may not have to look much farther than weather forecasts for the upcoming winter. According to Drew Lerner of Kansas City-based World Weather Inc., this winter will feature colder than normal temperatures in the northern-tier states, which will begin as early as October. “An early start to winter is predicted this year in the northern and central Plains, Great Lakes region and New England,” he wrote in a report released Monday.

His forecast, which fills a void in the energy industry following the departure of Salomon Smith Barney forecasters Jon Davis and Mark Russo, is based on his observations of warmer-than-normal sea surface temperatures in the northwestern Atlantic Ocean. This will spawn the formation of a high-pressure ridge over the Gulf of Alaska that will usher cold air from Canada far south into the midsections of the U.S., Lerner said.

©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.