The third time was a charm yesterday for bulls in the natural gas pit. After slipping lower Tuesday and Wednesday after two straight higher opens, gas futures added to early gains Thursday as traders rallied amid bullish weather news and technical factors. Gains were almost uniform across the front months, with summer strip advancing 24.3 cents to close at $5.502. The May contract, meanwhile, was 24 cents stronger at $5.422.

The biggest event for traders yesterday was the release of the much anticipated summer outlook put out by esteemed industry weather forecaster Jon Davis of Salomon Smith Barney (see related story this issue). While admitting that the nation as a whole is not headed for a particularly hot summer, SSB warned that the West, New York and New England can expect some abnormal heat waves. “It is hard to fathom the implications of a long-term heat wave in [any] of those areas; it becomes downright uncomfortable when one imagines such a scenario on both coasts simultaneously,” the group said in assessment of the California and New York City energy situations.

However, weather forecasts were not the only thing affecting traders’ psyche yesterday. The market’s ability to move the May contract convincingly above its 40-day moving average was significant. After failing to punch through resistance formed in the $5.30 area Wednesday, bulls wasted little time Thursday as they pushed May prices above $5.30 at about 11 a.m. (EST).

Looking ahead, another advance today may be easier said than done. While it would certainly paint a bullish picture if traders could make it five in a row with another session of gains Friday, that is unlikely, according to a Houston-based risk manager. Ironically, the most troubling scenario would be if prices open stronger once again. “There was some weak length entering this market Wednesday afternoon after the storage report. These will be the most likely to take profits ahead of the weekend. Prices could easily come off [Friday],” he said.

In addition to the potential for profit taking, another factor that could pressure futures prices today is the cash market, traders agreed. While Henry Hub prices for April have averaged above the May contract for the first part of the week, they were unable to keep pace yesterday. That could become even more evident Friday when utilities turn back gas in reaction to mild temperatures expected this weekend.

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