After opening on a strong note, natural gas futures tumbledlower in the first half-hour of trading Monday as traders tookprofits following Friday’s surprising 17.1-cent rally. However,once December had etched a $4.80 low for the day, the market wasleft to chop lazily sideways for the rest of the session. Theprompt month finished at $4.849, down 8.2 cents for the day.

Several traders polled by NGI were surprised by the market’sinability to test psychological resistance at $5.00, after openingjust a nickel below that level. However, mild weather across muchof the East gave cash prices little reason to mimic Friday’sfutures strength, making bulls dubious of those gains.

Looking ahead, traders remain in agreement that unless coolerweather shows up by Thanksgiving, the futures market will have adifficult time hanging on to the current price level. For proof,one only needs to look back at the warm weather last autumn whenthe market lost more than 30% of its value during a four-weekperiod beginning in late October.

However even below normal temperatures may be overlooked ifstorage continues to narrow the oft-quoted year-on-year deficit,which has shed a third of its value over the past two storagereports. As of Oct. 27, that shortfall stood at 283 Bcf.

According to New York-based IFR Pegasus, storage may continue tocast a bearish shadow over the market between now and Wednesday at2:00 PM (ET). “That’s when the AGA will release storage data forlast week that we think will show net injections of 15-25 Bcf,outpacing the 12 Bcf refill from a year ago.. This has thepotential to dampen bullish sentiment, although the market wasstrong enough to shrug off a more bearish 70 Bcf figure in theprior report.”On balance, Pegasus remains cautiously bullish andlooks to work the long side of the market with a $5.03 buy stop.

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