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Storage, Cooler Weather Usher Futures Lower

Storage, Cooler Weather Usher Futures Lower

Fresh news means everything in commodities trading and natural gas traders had their choice of bearish factors to point to yesterday. The one-two combo of the storage surplus and cooler weather put sellers in the driver's seat once again, and they reacted swiftly Wednesday evening by pushing the market lower in the after hours Access trading session. The July contract Thursday, tumbled 10.5 cents to finish at $2.355 in heavy trading.

The American Gas Association was the first to strike Wednesday when it released what many traders thought to be an undeniably bearish storage report, featuring a 91 Bcf injection. But before traders had a chance to digest the storage Wednesday, The National Weather Service (NWS) hit the market with more negative news. In its latest six- to 10-day forecast, the NWS looks for below normal temperatures for the huge gas consuming swath that stretches from Texas to Virginia.

And the three- to five-day forecast isn't any better. "Last weekend you were a fool to be short. This weekend you're a fool to be long. Weather is due to moderate, and that will not bail out prices like it did last Friday," he said.

However, a western trader fears prices are headed higher and believes now is the time to lock in winter requirements. "Any pull back [in prices] will be met by aggressive buying by those who have been sidelined during this artificially inflated rise in prices."

Looking ahead, several market watchers feel the market may have to wait until early next week for some positive news. Although it is too early to tell, some believe it is possible for next week's storage refill to be about half the comparable 108 Bcf injection figure from the same week last year.

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