Lack of follow-through selling kept the bears guessing yesterdayat Nymex as the market ignored a trio of bearish factors-weather,storage, and cash prices-to trade nearly unchanged on the day. TheNovember contract was limited to a tight trading range and settleddown just 0.4 cents to $2.176 for the day. Estimated volume was43,394.

November futures continued to exhibit erratic behavior Thursdayby not following cash prices when they dipped by as much as a dimein some points. The October cash versus November futures basis hasranged widely this month, trading anywhere from just 6 cents toalmost 50 cents.

Many market participants felt futures would come under furtherselling pressure Thursday on the heels of the Wednesday evening AGAstorage report. Featuring a larger-than-expected 58 Bcf injection,the report was met with additional selling in the Wednesday nightAccess trading session that some thought would spill over intotrading yesterday.

As the industry gears up for another heating season, the talk isonce again on both short- and long-range weather forecasts. Sourcespoint to revised forecasts calling for milder-than-expectedtemperatures this weekend as a reason for cash market softnessyesterday. Based on that, some believe futures will come under thesame selling pressure today, but forecasters and analysts are alsoadroitly looking at longer range predictions.

Raymond James & Associates of St. Petersburg, FL., warnsthat a return to normal winter weather could lead to significantlyhigher gas prices, at least for short periods this winter (seerelated story this issue). It continued by estimating that a returnto normal weather would produce an 8% year-to-year increase in gasconsumption this winter.

Tim Evans of New York-based Pegasus Econometric Group agreesthat prices will probably move higher this winter, but thinksNovember could move in either direction before its expiration nextWednesday.

“Market consensus is expecting a replay of October’s expiry thatsaw the market slam down to converge with cash, but there is therisk that if too many people lean in that direction, then we couldsee a spike up to the $2.40 level,” he said. In either case, helooks for cash-futures convergence, and if futures rally, then itwould be the cash market chasing futures higher, he continued.

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