Amid a devastating combination of a forecast calling forwarming temperatures and technical weakness, the natural gasfutures market started the year with a crash Tuesday, as tradersliquidated their long positions en masse. The price impact was feltimmediately as February prices tumbled below $9.00 in overnightAccess trading Monday night.

Then after an early attempt to push back above $9.00 failed inregular outcry trading Tuesday, bears were once again on theoffensive. The February contract finished $1.411 lower at $8.364,the largest decline for a spot month in the 10-year history ofnatural gas futures trading.

According to the latest six-to-10 day forecast released Tuesdayby the National Weather Service, above normal temperatures areexpected across a large triangular shaped area spanning fromwestern New York across to eastern Washington, then south to thetip of Texas. Only southern California, Arizona and Florida, whereit will be warm anyway, are forecasted to see below normalreadings. The rest of the country, including the eastern seaboard,parts of the Southeast, and much of the Northwest will see normalmercury readings.

While the forecast gained approval from residents of the Midwestand East who may now have a chance to dig out from under severalfeet of snow, it was not as popular with bulls at Nymex who, overthe past month, have come to rely on below normal temperatureforecasts.

For Ira Hochman, a consultant to several key local traders,there are a few key levels on which traders should focus. First isthe $9.08-10 area. Hochman advises traders to sell rallies untilthe market can stay above $9.10. On the downside, a close below the61.8% Fibonnaci retracement down to $8.24 would be very negativefor the market, he said.

Looking ahead, traders are looking forward to fresh storage newsto be released this afternoon. Tom Saal of Miami-based PioneerFutures predicts the American Gas Association will announce a netwithdrawal of 179 Bcf. Last week 175 Bcf was pulled fromunderground storage facilities and last year at this time themarket withdrew 133 Bcf.

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