With little in the way of fresh fundamental news, natural gasfutures traded mostly sideways yesterday as traders rested after atumultuous 10 days of trading activity. A modest gain in the promptmonth was more than offset by losses in each of the out months.November finished up 0.5 cents at $4.664 while the 12-month stripclosed 1.6 cents lower at $4.313.

After watching prices tumble more than a dollar in just twoweeks, many market watchers expected at least a modest retracementyesterday. “We saw good support in the $4.64 area off the Novemberchart. I was surprised prices were unable to use that as aspringboard to higher levels,” a broker said.

A Houston-based risk manager agreed, pointing to rising openinterest over the past couple of weeks. “The market has come underheavy selling pressure lately and your first inclination is toblame long liquidation. But that is not consistent with what openinterest has been telling us. Open interest has been moving higherover the past two weeks, indicating fresh short selling as opposedto long liquidation. I am waiting for some of those shorts to takeprofits before expiration,” he said. According to data from Nymex,open interest has increased from 368,359 on Oct 12 (when Nov.closed at $5.63) to 381,278 Wednesday.

However, many observers agree that neither technical support orshort-covering will be able to resuscitate this market if old manwinter does not show up soon. The fear is that next week’s storagereport (covering this week’s injections) will come in substantiallylarger than the 4 Bcf injection seen a year ago. If the weatherdoes not begin to slow the rate of injections next week, the marketwill have little trouble eclipsing the 12 Bcf that was injectedinto the ground a year ago next week.

In daily technicals, November has support on its last tradingday at the aforementioned $4.64 level. Resistance is seenWednesday’s $4.82 high ahead of a prior low off the daily chart at$4.98. The November contract expires today at 3:10 p.m. (EDT).

©Copyright 2000 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.