Natural gas traders were greeted yesterday morning by somethingseldom seen in recent years – a serious blast of below normaltemperatures in the key gas-consuming Northeast U.S. But evensub-freezing temperatures and gale force winds, which are expectedfor much of the eastern seaboard today, were not enough to overcomethe deleterious effects of forecasts calling for a quick return toabove-normal temperatures by the weekend. After an early buyingsurge failed to punch through $2.42, the January contract cameunder a heavy wave of selling that propelled prices lower to finishat $2.304, a 4.8-cent decline for the day.

For the second day in a row traders pointed to stout cash prices asan early trend-setter for the futures market. But for the second dayin a row, both markets fell during their respective tradingsessions. And to further complicate matters there was some confusionsurrounding the latest six- to 10-day forecasts for the NortheastU.S. While the National Weather Service calls for mostly above-normaltemperatures (see Daily GPI, Nov. 30)several prominent private forecasters expect more in the way ofbelow-normal temperatures, a basis trader explained.

Looking ahead, most traders agree prices will continue to hingeon the weather outlook, which will be updated this afternoon whenthe NWS releases its latest six- to 10 day prediction. And to goalong with that demand-side data, the American Gas Association willweigh in with the latest supply-side information this afternoonwith their weekly storage report. Market expectations are centeredon a net withdrawal of 10 Bcf or less, which would fall betweenlast week’s 20 Bcf draw and last year’s 8 Bcf injection.Comparatively, the five-year average is a 58 Bcf net withdrawal.

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