Except for an hour of storage data-induced volatility from 2p.m. (EST) to 3 p.m. (EST), natural gas futures were quietyesterday as traders were reluctant to pressure prices outside therecent trading range. At the closing bell, April prices were 3.5cents stronger at $5.35.

According to the American Gas Association, 73 Bcf was pulledfrom underground storage facilities last week, bringing working gaslevels to 786 Bcf or 24% full. Traders contacted by NGI yesterdaysaid that the 73 Bcf withdrawal, while not overly surprising, cameat the lower end of market expectations and was therefore bearish.Prices reacted accordingly by tumbling 8 cents in the five minutesfollowing the 2 p.m (EST) release. However, the weakness did notstick and by 2:25 p.m the April contract was back above unchangedon the day.

Yesterday’s post-AGA price action, while less violent thanprevious moves, was attributable to the same old thing, said TomSaal of Miami-based Pioneer futures.ÿ”You have this contingent oflocal traders who, in an attempt to skim a profit, are willing toeither short or go long the prompt month right as the report isreleased. Once they see the momentum that they have created beginto die, they quickly reverse their positions. They are just feedingoff of the volatility — nothing else.”

Despite the low withdrawal and the knee-jerk reaction by locals,Saal remains bullish on the summer months. “Natural gas is diggingitself a hole. We are pulling out 70-80 Bcf during a time of yearwhen you typically see withdrawals of 30-40 Bcf….. Analysts talkabout demand destruction. That we are missing about 8 Bcf a day ofdemand that we had last year at this time. I don’t buy that. Maybewe had some real decreases in demand when prices were at $10, butwe are a far cry from that level now,” he said.

Another potential bullish factor, he continued, is the upsloping”Trend 2000″ support line, which comes in at about $5.25 today andincreases at the rate of about a penny a day. “We have violated it,but not annihilated it. Until we move decisively beneath thatlevel, it will be a supporting factor for this market.”

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