After watching prices tumble 10% last week, bears in the naturalgas pit were content to cool their heels Friday in an amazinglyquiet trading session. The November contract slumped just 1.4 centsto close at $4.937 Friday after trading within a tight, 13-centtrading range. Estimated volume was light, with just 63,929contracts changing hands.

Heading into Friday’s session, traders were mixed as to whetherprices would continue lower into the weekend or correct in abargain-hunting rally. On one side of the coin, weather and storageremain bearish and that will continue to weigh on prices. On theother side is traders’ past experiences, which are based on amarket that has rebounded on each and every foray lower during thepast 10 months. Two weeks ago Friday, November prices dipped to$4.98 only to rally back strongly the next week, gaining 65 centsand etching a new life of contract high.

However, there are some notable differences between the Oct. 6correction and last week’s sell-off. Foremost is the contract’sability to move below and settle beneath the 40-day moving average,which Thursday existed at $5.182. While they do not hold as sizableof a position as they have in the past, fund traders, who are knownto trade heavily off the 40-day moving average, are long andtherefore could be looking to get short now that the Novembercontract has crossed to below its 40-day average.

According to the latest Commitments of Traders Report releasedFriday by the Commodity Futures Trading Commission, non-commercialtraders were net long 15,100 contracts as of Tuesday, Oct. 17. Itis likely that a good portion of that length has since beenliquidated.

Also of concern to technicians last week was the market’sability to move below the up-trend line, which has supported pricessince lows put in on July 26. Coincidentally, that line was seen assupport at $5.17 Thursday, almost spot on the 40-day movingaverage.

Technicals, however, only tell half the story. Traders polled byNGI last week were in agreement that winter weather, and notcandlestick charts and moving averages, would decide the fate ofprices this winter. According to the National Weather Service, theentire eastern half of the country can expect above normaltemperatures to extend through this weekend. Normal temperaturesare forecast for the Rockies, from Montana south to New Mexico.Alternatively, NWS predicts below normal temperatures for areaswest of the Rockies and traders will undoubtedly watch to see ifthat air migrates eastward by this weekend.

Another potential factor that futures traders will have tograpple with this morning is the impact of the delay of 1.325 Bcf/dworth of gas that was expected to flow Nov. 1 on Alliance pipelinebut now is not expected to flow until Nov. 13.

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