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October 29, 2001

FUTURES SURGE HIGHER . . .

 Natural gas futures scored triple digit gains in typically active expiration day trading Monday on the New York Mercantile Exchange. Prices opened higher and continued to advance closing near the highs of the session. Longer term traders see prices reaching a threshold of resistance approximately 16 cents higher. . .

 At the end of the day, the November contract rose $.161 to $3.202 per MMBtu, and the December tacked on $.156 to $3.339 per MMBtu. . .

 "The marginal cost for natural gas currently in storage for this season
is about $3.50 per MMBtu," says Tom Saal, Vice President Pioneer Futures,
Miami. . .
 "That should act as a ceiling for any further advances in natural gas
prices," he said. . .
 In the short term prices are rising to marginal cost because the threat of
increasing demand in part due to winter weather forecasts is rising daily. . .
 As prices approach that level, $3.50 should act as resistance, for should prices rise above marginal cost, buyers would have an incentive to utilize the lower priced gas at the expense of higher priced market gas.






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