The futures market continued lower on Friday capping off anextremely bearish week, which saw selling from all segments of themarket-trade, funds and locals. However, beleaguered bulls tooksome solace in a minor victory Friday afternoon when scaled downtrade buying lifted the December contract off its $2.125 low. Asmall but encouraging bounce ensued to recoup a portion of theweek’s losses. The December contract settled at $2.163 Friday, down5 cents for the day and 29.6 cents for the week.

With only two trading days left all eyes are focused on whetherthe December contract is able to build on Friday’s late rebound orcontinue lower amid bearish fundamental factors. Ed Kennedy ofMiami-based Pioneer Futures thinks weather holds the key toTuesday’s settlement. “An expiring contract is a creature of cashand cash prices are tied to the weather. Even short-term weatherforecasting is very difficult especially during a La Nina year.Three day forecasts can usually be counted on, but five day, andanything of greater length is very problematic because the systemscycle so fast during La Nina events. If we come into [this week] tofind forecasts have been revised to account for temperaturescolder-than-previously-expected, then the market should rebound.However, if the forecasts are right and we do receive the abovenormal temperatures, then the market could continue to trend lowerinto expiry,” he concluded.

“There are private forecasts out there that are calling for thelatest warming trend to melt ice caps and cause flash flooding,” aGulf Coast marketer half-joked. “Based on reports like that it isno wonder some analysts are calling for the market to break the$2.00 barrier before Tuesday’s expiration. But, there remains realvalue in cash prices for December in the $2.00-10 area. You have toask yourself whether you would rather be short or long physical gasfrom a $2.05 level for the entire month of December,” he continued.

In daily technicals, December has support at $2.10 andresistance at the prior support level of $2.24.

©Copyright 1998 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.