After a two-day, 20-cent price drop to begin the week, thefutures market held its ground Wednesday as traders waited on thesidelines in anticipation of fresh supply and demand news releasedyesterday evening. By virtue of its 0.5-cent advance and higherhigh and lower low, yesterday’s session completed a bullish outsideup day on the daily charts. But despite the positive movement, thespot contract was unable to fill in a key chart gap up to $2.52.

The cruel combination of bearish weather and storage newscontinued to vex traders looking for a price rebound. With storagenearing full and mild weather across much of the country, tradersare finding it increasingly difficult finding a home for thephysical molecules of gas. That was evident in cash prices in theNortheast U.S. yesterday, where prices fell by a dime or more at acouple trading points. And looking ahead, it may not get any betterfor the demand side of the market.

According to the National Weather Service, the northeasternquadrant of the country is expected to see above and much-abovenormal temperatures next week. Add that to the reduced incrementaldemand that is usually associated with the Thanksgiving holidayweekend and traders are starting to fear the worst. “This market isstarting to have the pathetic look that it did the first week inDecember last year when cash prices dipped to $1.05 at the [Henry]Hub,” a Houston trader said. “The signature was the same: storagemaxed out, moderating temperatures, and nowhere to take the gas.”

Through Nov. 12, the market had yet to take a bite out of theburgeoning storage level. According to data released yesterday bythe American Gas Association, 9 Bcf was injected into undergroundstorage facilities last week compared with a net withdrawal of 45Bcf last year. Storage now sits at 3,016 or just 66 Bcf less thannear-record levels seen in 1998.

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