Natural gas futures turned lower yesterday when a mixed bag ofspeculative and non-speculative selling more than offset light fundbuying. After gapping lower at the open, the February contractquickly mapped out its small, 5-cent trading range and moved verylittle for the remainder of the session. But the price damage hadalready been done, leaving the prompt month 9.6 cents lower tofinish at $1.975 and putting an abrupt halt to a 3-day, 29 centprice spike.

Sources said cash prices, which softened by a nickel or more atmany trading points, helped fuel the futures selling. A Chicagomarketer pointed to milder weather forecast by “several key privateweather services,” as a reason for the weakness in both cash andfutures Tuesday. “In order for prices to stay above the $2.00 levelthe market will need an sustained period of below-normaltemperatures,” he reasoned.

Tom Saal of Miami-based Pioneer Futures agreed, adding that itwill also take some hefty storage withdrawals over the next severalweeks to convince fund groups to cover their short positions. Andbecause of the copious amounts of gas currently in the ground, Saalthinks only a withdrawal of 200 Bcf or greater would make themarket stand up and take notice. “But I don’t expect to see adrawdown of that magnitude until next week at the earliest. [Today]we will see a withdrawal of about 150 Bcf which is more in linewith last year’s 131 Bcf tally.”

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