It was business as usual last week at the New York MercantileExchange as the market continued its tug of war, pitting storagebears against bottom-seeking bulls. And just as the case has beensince the middle of 1998 when the downtrend began, it was the bearswho were dominant, pulling optimistic buyers dangerously close tothe mud in the middle. But just when even the most time-weatheredbulls were ready let go of the rope, the market managed to fumblehigher in lethargic Friday afternoon trading. The April contractfinished up 1.2 cents for the day at $1.699.

However, Friday’s anemic estimated volume of just 34,580 andlack of volatility gave traders the opportunity to speculate onwhat the market may do this week. The Pegasus Econometric Group ofNew York thinks the current mixture of fundamentals and technicalsneeds to be sorted out before a reliable trend can develop.”Storage data for last week was basically neutral; draws were morethan expected but less than a year ago. The weather this week hasbeen warm, but has also been discounted,” the group wrote in itsMarch 19, 1999 Natural Gas Report.

And Tom Saal, of Miami-based Pioneer Futures agreed that futuresare in the process of groping for fair value. “The market is in atransitional stage right now between the [storage] withdrawal andinjection cycles. Fundamentally we are very balanced.” Saalcontinued by adding that the natural gas could be setting itself upfor more losses. “Funds started to rebuild some of their shortpositions [last] Monday and Thursday. They will be the aggressivesellers if April makes new lows on Monday.” However, he countersthat technical scenario with a more constructive fundamental one.”If the weather does not begin to moderate into the month of April,then we will be in an interesting situation with both [storage]injections and withdrawals going on at the same time.”

Moderating temperatures is exactly what the National WeatherService (NWS) is calling for. In the latest six- to 10-day forecastreleased Friday, the NWS looks for above-normal temperatures tocover a huge U shaped swath from Idaho; down across northern Texas;and back up to, and including, northern New England. Normaltemperatures are expected in New Mexico and the Mid-Atlanticstates, leaving the West Coast and parts of the southeast as theonly areas with below-normal readings.

In daily technicals Pegasus sees support at $1.67 ahead of thecontract low of $1.625. Resistance resides at $1.77.

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