November natural gas prices climbed above the $3.50 level during the initial morning hours but have since come of their best levels. While the market tries for its sixth consecutive higher close today, there are concerns that prices have run up too far too fast. The natural gas market drafts support from the latest six to 10 day weather maps that show a large area of below normal temps moving east into October 11th, as well as a low-pressure system located southwest of the Cape Verde islands that has a 60% chance of becoming a tropical cyclone in coming days. However, natural gas prices at $3.50 put it at a $1.30 million btu premium to coal, which is the highest on the spread in a year. This has the potential to invite more natural gas switching back to coal, and that is seen as a force taking demand away from natural gas. While the bulls get the early nod, a move this morning below $3.479 has the potential to attract a profit-taking decline back to $3.351.
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