Pressured by follow-through selling on the heels of Wednesday’sstorage report, and amid crashing cash market values, the naturalgas futures market tumbled lower Thursday as weak longs continuedto head for the exits. After gapping lower at the open, theFebruary contract checked sideways-to-lower throughout the day tofinish at $8.708, down 42 cents on the session.

A Houston-based risk manager was quick to point to Wednesday’slower-than-expected storage withdrawal as a primary factor in thetwo-day, $1.171 price slide. “I was looking for a 168 Bcfwithdrawal, but there were reports from the floor at NymexWednesday that locals were expecting a 200 Bcf drawdown.. It’s nowonder the market sold off so hard [Wednesday afternoon andThursday].”

According the American Gas Association, 167 Bcf was pulled fromunderground storage facilities last week, decreasing total workinggas levels to 1,562 Bcf or 47% full. Storage now stands 760 Bcf or33% less than levels seen at this time last year.

In addition to the bearish storage data, Nymex bulls were forcedto choke down another day of losses in the cash market. WhileJanuary first-of-month index levels were set high during a periodof unusually cold temperatures at the end of December, incrementalprices have since fallen amid milder weather, leaving some pointsin the Northeast to trade at a fraction of their first-of-monthlevels.

Looking ahead, traders are mixed as to whether this week’sdecline signals an end to the bull run of 2000, or just a pausebefore prices rumble higher. On balance, most traders favor thelatter scenario, and site the fact that even though the marketsince Monday has shed more than 10% of its value, it is still morethan 50 cents above lows reached just last week. Re-introducing aword that has been absent from gas trader’s vocabulary, a brokersaid yesterday that futures were “consolidating” for a push higher.Accordingly, he expects the market will continue to be boundedwithin the $8.14-$9.925 range until fresh fundamental news isavailable.

Susannah Hardesty of Indiana-based Energy Research and Tradingconcurs and believes that baring a dramatically revised weatherforecast, prices will remain within the $8.00 -$9.40 area betweennow and the expiration of the February contract. That said,Hardesty recommends buyers scale in on dips to the $8.00 level andsellers look to trade February on a bounce above $9.00.

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