It was no secret what bull traders in the natural gas pit had todo yesterday in order to propel the market higher; the charts toldthe story.

After bounding 13 cents higher Monday and Tuesday, the Februarycontract was positioned right below critical resistance levels at$2.63 and $2.69. A move through those levels would in alllikelihood usher in a fresh wave of buying, while a failure topunch through those levels would only serve to strengthen them.

Bulls batted 500 yesterday, eclipsing the first level ofresistance with a $2.67 open, but failing to break though $2.69.That failure sent prices spiraling lower throughout the day astraders elected to take profits on long positions. The prompt monthfinished down 9.3 cents at $2.523 on its penultimate trading day.

Watching in disbelief as prices slipped lower, one observercommented on the cash-futures spread, which widened from a nickelTuesday to more than 20 cents yesterday. “This is usually the timeof month when we are seeing convergence, not divergence,” hecomplained.

A possible explanation for the spread, argued a Houston riskmanager, is the difference in January and February weather.”Although it is forecast to remain cold for the next 48 to 72hours, what is to say it will remain that way for the 29 days ofFebruary. People are already discounting February weather,” hesaid.

Although the National Weather Service has generally beenforecasting warmer weather than what has actually transpired overthe past week (just ask anyone on the snowbound East Coast), it isstill looking for temperatures to moderate the first week ofFebruary over a large portion of the country.

In addition to the price-negative weather news, the futuresmarket also learned yesterday that the American Gas Associationwould not release its weekly report until this afternoon. Bullshave been hanging their hats on that report, which is expected toshow a sizeable 175-220 Bcf withdrawal. Now that the report hasbeen pushed back a day, it will not be released in time to have aneffect on the expiring February contract.

In last day technicals, February will find resistance at the$2.63, 2.67, and $2.69 highs. Support, on the other hand, exists at$2.50 ahead of failed trendline congestion in the $2.45 area.

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