Six inches of snow in New York wasn’t enough to convince futurestraders to resume the up-trend the American Gas Association storagereport so thoroughly wiped out last week. The April contract movedsharply lower for the third session in a row, closing down 4.2cents to $1.717. Shortly before the close, the contract broke belowwhat was deemed a key support level at $1.70 to post a low of$1.695 for the day. The $1.755 high was reached just after theopening bell.

“For right now, I’d say it looks like the market is still goinglower,” said Alan Kaufman of Trilogy Capital MGT. “[How much lower]will depend on the fundamentals. It’s been in such a soliddowntrend for a relatively long time that even the shorter-termaverages we look at, the 90-day, have held us short here for sometime. So today’s action to the downside just kept us right in acomfortable band away from any of the significant averages. I couldsee us being down another 10 cents at the end of this week,” hesaid.

The only bullish signal for natural gas, according to Kaufman,was the rally going on in the neighboring crude oil pit at Nymex.It’s possible there could be some psychological spillover into thegas pit if another fundamental indicator, such as a big storagewithdrawal, provides the spark, he said. “If crude continues torally it might provide some support for natural gas in here. Peoplestart to get bullish in the pit next door and they say ‘wellnatural gas is energy and it’s been going down forever; it lookscheap.”

A psychological factor that could be pulling traders in theother direction, however, is the weather forecast for New York.Sixty-degree temperatures are forecast for the next few days. “It’sonly half a joke that the local weather affects trading on theexchange,” said one trader.

He said, $1.625 is the next major support level. It was thecontract low set on Feb. 26. “This thing has dropped like a promdress. The daily technicals are really right there in the middle soyou’ve probably got a little bit more room for this thing to movedown if it wants to, maybe another 7 cents. But I’m guessing themarket isn’t going to get close to $1.625, at least until thestorage report comes out. If the withdrawal turns out to be muchlower than expectations, then I think we’ll test that lowespecially because now there’s a backdrop of really warm weather.”

The National Weather Service’s six- to 10-day outlook for March21-25 released yesterday is calling for above-normal temperaturesover the Rockies, the Plains, the Midwest, most of the Southeastand the Mid-Atlantic regions. Normal temperatures are expected overthe Midcontinent and Texas. The only area expected to seebelow-normal temperatures is along the Pacific Coast.

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