Pressured by weakness in the Sunday night Access trading session, the natural gas futures market turned lower Monday in sympathy with losses in the crude oil market and amid bearish short-term technical factors. However, chilly temperatures and stronger Northeast cash prices was enough to slow the downside momentum, leaving the April market with a modest 3.6-cent decline and $5.546 close.

After peaking at a new, one-year high of $38.50 Friday, crude oil slid 2.5% Monday on talk that OPEC may delay scheduled output cuts when the cartel meets next week in Vienna. “If OPEC [maintains] output near its recent 28 [million barrel per day pace] the second quarter surplus could run to as much as 4 [million barrels a day], enough that even the most dedicated bull might have to recognize as a bearish development,” noted Tim Evans of IFR Pegasus in New York. April crude fell 97 cents to close at $37.11 Monday.

However, crude oil was not the only wet blanket on gas prices Monday. Also a weighing on natural gas were technical factors that had turned decidedly negative last week. “Gas closed below $5.61 on Friday, which turned the daily stochastic oscillators down and indicated that prices were likely to move sideways to lower before building a base that would send prices above $5.80,” noted Craig Coberly of GSC Energy in Atlanta Monday.

Ed Kennedy of Miami-based Commercial Brokerage Corp. agreed with Coberly’s appraisal of the market, but pointed instead to Bollinger Bands which signaled a change in the trend late last week. “Look for a test of the $5.45 to $5.305 level for April….Buyers be ready,” he urged his clients in a note Monday.

Also playing into traders decisions Monday was the latest news from the Commodity Futures Trading Commission showing fund traders covered a healthy chunk of their net short positions during the week ending March 16. Specifically, the Commitments of Traders report indicated non-commercial accounts had reduced their net short exposure down to 3,562 positions from 11,466 the week prior. While it is possible these fund traders now plan to load up on longs and drive the market higher, it is equally possible they have merely reloaded for another round of net short accumulation.

In addition to cash prices, which remained relatively strong on chilly weather in the Northeast, expectations on the magnitude of this week’s storage withdraw was a positive price factor Monday. Early market banter is calling for a withdraw in the 30 – 60 Bcf range, with most estimates closer to the top end. If realized, a number near 50 Bcf would compare bullishly versus the 6 Bcf injection notched last year at this time and the 41 Bcf five year average withdraw.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.