The March futures contract lost 5.3 cents to settle Wednesday at$1.765, thanks to what sources believe was a combination of weaktechnical and fundamental factors. “Today’s drop in the Marchcontract was actually a response to a failure at the 18-day movingaverage for March of $1.824,” one trader said, although otherschimed in many people sold ahead of what they thought would be abearish AGA storage report. Sure enough, the actual report came inat 78 Bcf of withdrawals, which is “significantly” lower than the102 Bcf of gas withdrawn during the same period last year.

Despite the increase in the year-on-year storage surplus, Marchwas down only 0.1 cents to $1.764 as of 5:00 pm during last night’sAccess trading. “It appears that the minor support and resistancelevels of $1.735 and $1.82 are defining the trading range for thevery short term,” an analyst said. “The reason is mainly thatfundamentals are a little too weak to enable a run of over $1.80,but the technical trading pattern this winter is still somewhatbullish, and the funds are still short,” he noted.

“As far as the rest of this week is concerned, the physical sideof this market should come in to play,” another trader said. “Youought to see an increasing amount of turn-back gas by utilities forthe weekend. This turn-back gas ought to make the swing poolssurplus, which in turn ought to make the price come down,” heexplained. The trader thinks the contract could test $1.70 betweentoday and Friday.

On the other hand, the Pegasus Econometrics Group’s Natural GasReport dated Feb. 3 said that technically, the current market hastwo subtle bullish advantages over last week’s rally attempt.”First, the new low Monday on the March contract was hardlydifferent from the prior one, a very near double bottom at $1.73.Second, the market was less oversold creating a bullishdivergence,” the Group said. Both of these conditions increase thechances that March will be able to clear the minor resistance at$1.87 and go to work on last week’s $1.89 high, it added. “Weanticipate fund short covering on a break above that level, withthe $2.05-07 area as a possible near-term target.”

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.