After opening higher Monday, then revisiting the $9.20 high from last Thursday, December natural gas futures fell for the remainder of the session to settle at $8.72, down a half of a cent from Friday’s close.

This Monday was much different from a week ago, when the December contract dropped 17.2 cents to settle at $8.822. Last Monday, December reached a low of $8.75, while the contract this Monday registered a low of $8.61.

“I’m not sure what caused that early rally, because the weather forecasts are all pretty consistent in saying that it will likely become colder than normal soon,” said Tom Saal of Commercial Brokerage Corp. in Miami. “What I heard was that the funds were big sellers in both natural gas and coincidentally crude oil on Monday.”

The National Weather Service’s latest six-to-10 day outlook appears mixed, with warmer than normal temperatures in the West, cooler than normal temperatures in the East, and normal temperatures running on a strip from Texas to the north. The eight-to-14 day outlook, which was also released Monday, basically said the same thing.

“There was notable fund selling after we failed to make a new high on the daily continuation chart of $9.20,” Saal added. “Now you have something that looks kind of like a potential double top at that $9.20 level, which was also reached on Oct. 28. To confirm whether it is a topping pattern, the first thing you have to do is settle below $8.526, which we obviously haven’t done yet. You want to make sure that you look at several different factors.”

Crude saw a $1.63 drop on Monday to settle at $50.13/bbl. Some speculated that the drop in crude was in anticipation that Sen. John Kerry would win Tuesday’s presidential election. The prevalent theory was that if Kerry were to win, the management of the Strategic Petroleum Reserve might relax and tensions with the oil-producing Middle East might ease.

Looking at the polls in general, Saal said both Kerry and George W. Bush appear to have a 50/50 shot at winning. “If it was 60/40, I would stay in the trade, but it’s not,” said Saal. “If Kerry gets elected, I wouldn’t be surprised to see a drop in natural gas and oil prices. We would see a change in something.” He noted that President Bill Clinton took oil out of the Strategic Petroleum Reserve to lower prices during his presidency.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.