Despite warming temperatures, both forecasted and actual, thenatural gas market posted its second day of gains Thursday in atechnically driven trading session. After a strong open, theDecember contract received a boost from short covering by tradersbetting that the market may have reached a short-term bottom in thelow $2.40s. The prompt month finished at $2.496, up 4 cents on theday.

With the American Gas Association and the National WeatherService each weighing in with bearish news Wednesday evening,several traders were surprised by yesterday’s price strength. Butothers were quick to point out that those reports had, to a largedegree, already been factored into the market. Moreover, a New Yorkanalyst believed that prices may have put in an interim bottomafter support at $2.41 held earlier in the week. “It is not a solidbase, but [Thursday’s] settle was constructive and we could movehigher into the weekend,” he reasoned. And if bulls are able totake the market higher, their first order of business will be tofill in the chart gap created below $2.52 by Tuesday’s lower open.In order for that to happen, however, the market will have to getpast some more bearish weather news released late yesterdayafternoon.

According to the National Centers for Environmental Prediction,the southern two-thirds of the country will experience above normaltemperatures on average over the next three months. In both the30-day and 90-day forecast the NCEP call for the largest deviationfrom the norm to occur in the extreme south, with temperaturesmoderating to normal to the north. The only below-normaltemperatures are forecast in Southern California and across partsof the Dakotas and Minnesota. A graphical depiction of theforecasts are available here.

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