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Forecasts Turn Milder; March Called Down 13 Cents

March natural gas is expected to open 13 cents lower Monday morning at $2.17 as overnight weather forecasts took a hard moderate turn for key population centers. Overnight petroleum markets plunged.

WSI Corp. in its Monday morning outlook said, "[Monday's] six-10 day period forecast is sharply warmer or not as cold as Friday's forecast across the north-central and eastern U.S. The West is colder. CONUS GWHDDs are down 16 and are now forecast to be 131.8. Forecast confidence is a little below average. Model inconsistency and uncertainty during transitional patterns are limiting factors, but there is still confidence that a colder pattern will emerge by the end of the period.

"The forecast over the eastern two-thirds of the nation has room to waver in either direction as models are struggling with the evolution of multiple disturbances within a transitional period. However, the greatest risk is to the colder side."

In a weekly report to clients, Mike DeVooght, president of DEVO Capital Management, said last week's rally was not enough to implement short hedge positions. "Natural gas closed higher across the board. After trading in a tight range for most of the bidweek, gas rallied at week's end. Colder temperatures in the eastern half of the country, starting next week, helped to spark the rally. The weekly storage number came in with a slightly bigger draw than anticipated. Also supporting the gas market has been the steady decline in open interest as the shorts continue to unwind their short position.

"On a trade basis, we have been looking for a rally as an opportunity to establish short hedges. The recent rally fell short of our target levels of $2.60-2.70 on the spot market."

According to NGI's Daily GPI, Henry Hub spot natural gas Friday averaged $2.25, up 13 cents.

In overnight Globex trading March crude oil fell $1.29 to $32.33/bbl and March RBOB gasoline lost 3 cents to $1.1043/gal.

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