Led by heavy buying interest in winter months, natural gasfutures continued to defy gravity yesterday as traders bid themarket up for the seventh straight session. June finished up 5.2cents at $3.448, but the real story was the Nov-Mar. strip, whichnotched an impressive 7.3-cent gain to close at $3.613.

“We saw some good spread trading by both commercials and funds,”said George Leide of New York-based Rafferty Energy Group. “Theywere buying January 2001 and selling June 2001. At 68 cents theyare betting [the spread] will widen out from here.” That spreadwidened slightly, finishing at 65.1 cents on the day.

Looking ahead, many traders are focused on the release of freshstorage data this afternoon. Preliminary estimates are calling forthe report to show a 50-70 Bcf net injection, which would fallshort of both the six-year average of 83 Bcf and last year’s 79 Bcfrefill. However, for Tom Riley of West Virginia-based Riley NaturalGas, anything less than 60 Bcf would be bullish. [2000 storagelevels] have dropped below the 6-year average and show no signs ofturning,” Riley said. Storage currently stands at 1,117 Bcf andthe six-year average for this week is 1,181.

And while Riley’s view of the market could be described ascautiously bullish, Leide believes there could be a littleintermediate term retracement from these levels. “You have to takesome profits up here and wait for the market to prove you wrong. Weare looking at two highs from the weekly continuation chart at$3.48 and $3.525 to serve as intermediate resistance. It’s hardright now to be a seller. Markets never look good at the bottom,and they don’t look lousy at the top. You just have to trust yourtechnicals up here,” he reasoned.

If prices correct as expected, he targets $3.38 and then$3.29-31 as levels of intermediate support.

Alternatively, if the market is successful punching throughresistance at $3.48 and $3.525, then $3.60 is our next stop, hesaid.

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