Natural gas futures continued to defy gravity Friday when a laterally nullified losses achieved earlier in the session. Afterposting an early low of $4.395, September rumbled higher to closeat $4.475 and in doing so, posted a gain for the ninth straightsession. Estimated volume was extremely light, with only 37,841contracts changing hands.

Mild temperatures expected over the weekend across much of theeastern U.S. was enough to send many cash prices lower for thesecond day in a row Friday. However, the futures market held itsground as traders showed a bias to being long over the weekend.”There is just too much risk to go home short over the weekend,” aGulf trader said. “Nobody wants to watch helplessly as a hurricaneforms over the weekend and then have Nymex gap 30 cents higher onthe open Monday morning. It just makes more sense to go home forthe weekend flat or even a little on the long side.”

Moreover, he believes that a trend is forming in which tradersgo home for the weekend long and then if there is nothing on thehorizon Monday, they liquidate their positions on the open. It isworth noting that aside from this past Monday when September spikedafter traders learned that Alberto had reached hurricane statusover the weekend, the prompt month had slipped at the beginning ofeach of the prior five weeks, dating back to a 36.7-cent tumble onJuly 5.

Looking ahead, traders will be focused on fundamental factorsthis morning when updated temperature and hurricane forecasts arereleased. While Alberto is no longer a threat, the market is nowfocused on a tropical wave, which as of Friday was located over theMexico’s Yucatan Peninsula. Several private forecasters, includingJon Davis of Salomon Smith Barney, give the storm a chance ofstrengthening into a hurricane once it moves back over warm Gulf ofMexico waters. Davis will be tracking the storm this weekend andupdating his clients via a recorded message, sources said.

But even if the storm fizzles over Mexico, all hope is not lostfor bulls, who look for another boost from warm weather bymid-week. Several forecasts were in agreement last week that theNortheast and Mid-Atlantic will finally get their share of the warmsummertime temperatures. July went down on record as one of thecoolest in history for places like Washington, Philadelphia and NewYork, while cooling degree days tallies were just half the totalsseen last July.

However, fundamental factors are not the only ones worthwatching. Traders were also eager to take a look at the latest openinterest break-out from the Commodity Futures Trading Commission.According to the CFTC’s Commitments of Traders Report releasedFriday, non-commercial traders decreased their net long positionfrom 10,300 to 8,500 over the last two weeks while commercialtraders stayed just about pat with a net short position of 25,000.And if those data seem less than compelling, it’s probably becausethose respective market groups are just about in their naturalstate. Commercials who are naturally long physical supply, arenaturally short futures, while non-commercials or funds, who liketo load up on futures as an inflation hedge, are naturally long.Over the past two years, non-commercials have averaged a littleover 8,000 long while commercials have averaged almost 27,000 short— just about where the market stands currently.

“This market is like a time-bomb,” said a Houston-based riskmanager after looking at the CFTC data. “The funds are basicallyflat right now. They could either load up on longs ahead of ahurricane or decide to get real short after the next hurricanerun-up. Either way, [the market] will be in for a ride.”

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