It is often said that it takes markets longer to rise than itdoes for them to fall and that adage was never more true thanyesterday in the natural gas pit as prices finally recouped thelast of the massive $1.411 price erosion seen a week ago. Aftergapping higher on the open, the February contract shuffled mostlysideways Monday as traders awaited fresh medium-range weatherforecasts. At the closing bell, the prompt month was 42.8 centsstronger at $9.689.

Sources were quick to point to strong cash market pricesyesterday morning as a major contributor to yesterday’s futuresadvances. Gains of a half-dollar were common at many Gulf Coast andTexas locations while Northeast markets advanced roughly a dollar.Those gains, however, came as a surprise to many traders whofigured cash prices would tumble in anticipation of rising mercuryreadings expected through the week.

According to the latest six- to 10-day forecast released Mondayfrom the National Weather Service, above normal temperatures areexpected to continue for areas east of a line drawn from easternMontana to the panhandle of Florida. Below normal temperatures,meanwhile, are forecast for the western third of the country, withnormal temperatures confined to narrow sliver in the center of thecountry.

Looking ahead, traders are anxious to see how moderatingtemperatures that began last week have impacted storagewithdrawals. Tim Evans of New York-based IFR Pegasus predicts theAmerican Gas Association will show a net withdrawal of 150 to 170Bcf Wednesday, easily outpacing the 115 Bcf tally from last year,but shy of the 209 Bcf draw seen a week ago.

Based on temperatures last week that were 30% colder than lastyear and 7% colder than average, Salomon Smith Barney expects theAGA will announce a 160 to 175 Bcf withdrawal this week.Consequently, the year-on-year storage deficit should widen to 755Bcf or 33% below last year at this time.

©Copyright 2001 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.