After watching prices lose 9% of their value Monday, natural gastraders cooled their heels yesterday in a session in which neitherbull nor bear was able make its mark. As a result, the Marchcontract began its tenure as prompt month by inauspiciously sagging3.9 cents to close at $6.097.

A California trader who watched western prices crumblethroughout the day was somewhat surprised that futures prices didnot follow suit. “The consensus around here is that the market madea dead cat bounce [Tuesday] and Wednesday we will see acontinuation to the downside. The latest six- to 10-day forecast isbearish and storage will not make matters much better,” he said.

The American Gas Association will release updated storagefigures this afternoon and most market watchers and analystsbelieve the report will show a net withdrawal of about 120 Bcf, orless than half the 242 Bcf seen at this time last year. Thefive-year average withdrawal is 154 Bcf.

Tim Evans of New York-based IFR Pegasus sees very little hopefor bulls in storage reports this week and next. This week he looksfor a 100-140 Bcf withdrawal and based on the weather so far thisweek, he does not think next week’s withdrawal will be much better.

Technicals and weather on the other hand, may be tipping to thebulls’ favor, he continued. Probing lower in early tradingyesterday, the March contract carved out a $5.83 low beforerebounded to settle almost unchanged on the day. At first glancethe $5.83 level may seem insignificant, but on closer inspectionone will find that it lines up almost perfectly with $5.82 supportat the 61.8% Fibonnaci extension below the recent $6.45-$7.47range. Add to that the latest eight- to 14-day forecast released bythe National Weather Service that calls for a return to normal andbelow normal temperatures by mid-month, and you have the chance fora rally, Evans continued. And while he admits that nothing outthere is compellingly bullish, he cautions traders that the upsidepotential has grown larger over the last couple days.

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