Volatility was once again the name of the game yesterday in thenatural gas pit at Nymex as prices tumbled lower after bulls failedto do much of anything with yesterday’s stronger opening trade. TheNovember contract was dealt the most severe blow, slipping 13.8cents to close at $5.152. The winter strip did not fare muchbetter, dropping a cool 12.5 cents to finish at 5.076.

Similar to last Thursday’s 32.3-cent sell-off, yesterday’s movelower was seen as a delayed reaction to bearish storage datareleased less than 24 hours earlier.

According to the American Gas Association, 78 Bcf was added tounderground storage facilities last week, bringing total workinggas in storage to 2,480 Bcf or 75% full. Despite an almostunanimous consensus that the report was bearish, prices bounced offa $5.15 low Wednesday to close nears its $5.295 high. However, thatdid not dissuade bears as they took the November contract to itslowest level in almost a month.

Also seen as a bearish factor yesterday was the route ofHurricane Keith, which true to forecasts came ashore well south ofthe Texas-Mexico border, missing the gas-rich northern Gulf ofMexico. As of press time last night, the storm was located about 55miles north-northwest of Tampico, Mexico and had begun to weaken.

However, Keith was not the only weather phenomena that traderswere watching yesterday. Also of interest was the development ofwhat forecasters are calling the first Canadian air mass of theseason for much of the U.S. Temperatures as far south as Texas andLouisiana are expected to drop into the 40s on Monday, according tothe National Weather Service. And while that weather will certainlyfrost some pumpkins, it actually represents a slight moderationfrom the lows in the 30s that the NWS was calling for on Tuesdayand Wednesday.

Technically speaking, Tom Saal of Miami-based Pioneer Futurestook note of the market’s ability to break below support at $5.235yesterday. For him, $5.235 was important because it stood as theintermediate low between two highs ($5.495 and $5.565) reached onthe November chart during the latter half of September. “Not onlydid that set a pattern of lower lows, but it also put us solidlybelow the steep uptrend line that has supported the market sincethe $3.61 low put in on July 26.” Looking ahead, Saal does not ruleout a little short-covering ahead of the weekend, but remainsbearish in the intermediate-term. We are getting very close toNovember’s 40-day moving average. If the market is able to settlebelow the 40-day, and it could really take a hit,” he reasoned.Yesterday, November’s 40-day moving average came in at $4.988.

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