Relieving technically overbought conditions and following thelead of weaker mid-morning cash prices, traders ushered natural gasfutures off its morning highs yesterday to notch its first down daysince Wednesday, Feb. 23. The April contract lost 3.2 cents at$2.783.

A Houston-based source was quick to point to cash prices, whichdipped significantly just before 9 a.m. (CST), as a reason for theweakness in futures. “We saw (March cash and April futures)convergence twice yesterday. The [Hub] matched the screen early at$2.86 and then again late at $2.75. Once futures ran out of peoplewilling to buy at fresh highs today, the rout was on.”

However, many sources were not surprised by yesterday’sretracement. In fact, one source went as far as calling the 3-centdecline bullish because it relieved extremely overboughtconditions. “The market just could not continue to move higherwithout taking time to catch its breath. April has trendedmethodically higher for the last 5 days. [Thursday’s] correctionwas healthy and I won’t be surprised if it continues [Friday]. Aslong as we stay above the $2.66-68 level or even the $2.58-60 levelwe have not jeopardized the uptrend.”

If the prompt month does continue lower today, it can expectsupport at previous lows of $2.725 and $2.645. Resistance, on theother hand, is seen at Thursday’s $2.865 life-of-contract high.

©Copyright 2000 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.