The natural gas futures market tumbled lower last Friday morningwhen a lower open was greeted with steady, unchecked sellingpressure. But after getting caught snoozing early in the day, bullsfought back by bidding up the March contract above $1.80 in choppymidday activity. And by 2:30 in the afternoon many sources feltthat the market would close out the week quietly-right? Wrong-lateposition squaring and market-on-close sell orders had the last sayFriday as they deposited the prompt month contract to its $1.777settle. Estimated volume was 67,482.

One trader was quick to point to the similarities between theprice action last week and the week prior as a sign the market washeaded lower on Friday. “We saw enticing little bounces bothThursdays and that gave the market some optimism going intoFriday’s trading. But in both cases the sellers were fast out ofthe chute Friday morning, which set the bearish tone for the days’trading.”

A New Jersey analyst agrees, adding that it is difficult torationalize being long the market going into a weekend which willsee warmer-than-normal temperatures across much of the nation.

“But how much more bearish can the fundamentals get?” asks TomSaal of Miami-based Pioneer Futures. “The trend is still down andsome technicians see the possibility of $1.50-type numbers, but wehave to wonder how much of this has already been embedded into theprice.”

And although Saal does not rule out a move lower, he sees twopotentially bullish factors that could come into play soon.”Storage players are going to be taking a very close look at summerfutures as they continue to withdraw their reserves from theground. The April through October strip looks like an attractivebuy compared with the prices they paid last year.” Similarly, Saalpoints to a growing interest on the part of commercial traders to”get a little bit of length” at these levels. The Commodity FuturesTrading Commission released its bi-weekly Commitment of Tradersreport Friday which showed that for the period ending Jan. 26,commercial traders were net long 5,176, up from 592 the priorreport.

But some feel that the only hope for this market is a sustainedperiod of below-normal temperatures. And although the NationalWeather Service’s 6- to 10-day forecast released Friday predictsthat the Eastern two-thirds of the country will see above andmuch-above normal temperatures, there are those that look for adramatic cool-down to follow.

Fred Gesser of Omaha-based Strategic Weather Services is firmlyin that camp. In his medium range forecast he calls for Arctic air,currently in confined to Alaska, to make its way into the CentralU.S. beginning Feb. 9-12. “From there, it is likely that thebelow-normal temperatures will gradually drift to the East by Feb.12-16,” he continued.

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