For the third week in a row, natural gas futures came underheavy selling pressure in the Sunday evening/Monday morningovernight Access trading session, initiating a gap lower open whenregular open-outcry trading resumed Monday at 9:30 a.m. (ET). As itturned out, that was about all the excitement the market couldhandle for one day because prices remained almost unchanged,slipping only 2.9 cents through the session as traders elected toremain mostly on the sidelines. Although the change throughout theday was small, the damage done overnight was significant, demotingthe March contract to $5.821, 38.9 cents beneath Friday’s close.

Traders contacted by Daily GPI Monday were quick to point to atrend that seems to be forming whereby the market cascades lowerearly in the week, only to rebound by a lesser amount later in theweek. One possible reason for this trend is that marketparticipants sell-off their positions early in the week ahead ofthe release of bearish storage data, only to re-acquire thosepositions in expectation of cooling weather.

Looking ahead, market watchers predict the American GasAssociation will announce a withdrawal of about 100 Bcf thisWednesday, well below the 158 Bcf that was pulled from undergroundstorage facilities a year ago. Comparatively, the five-year averagewithdrawal is 117 Bcf.

Meanwhile the weather remains the wildcard, as both private andgovernmental forecasters call for a return to seasonal andbelow-normal temperatures by the end of the week in heavilypopulated areas from the Midwest to the Northeast.

Ultimately, weather and storage will be paramount as the winterheating season comes to a close over the next six weeks. However,in the absence of strong price direction bullish or bearish, mostanalysts believe that prices will stay range-bound during thatperiod.

“The market appears corrective,” says Cynthia Kase of NewMexico-based Kase and Company.”This means that the moves to theupside are likely to be only transitory. The odds continue to beextremely balanced with a neutral to negative view only slightlyoutweighing that for a more positive outcome… So for March, weexpect prices to be held within a trading range as the marketawaits new input from outside events to decide which way to go. Itis unlikely that the range will be bounded by recent highs, but itwill probably hold about $0.10 lower. The range is bounded on thedownside by the $5.73,” she wrote in Commentary on Gas, datedMonday, Feb. 12.

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