Bearish fundamental factors once again took over at the New YorkMercantile Exchange Tuesday, sending the natural gas futures marketspiraling lower and nearly erasing gains registered over the priorthree trading sessions. Even cash prices, which continued to spikedramatically higher yesterday, did not influence the futuresmarket. After January opened below key support, the market neverlooked back as prices fell 18.8 cents to $1.913 at the closeTuesday. And just like that, the futures-cash basis has shrunk froma whopping 97 cents to a tight 14 cents over the past two days.

A Gulf Coast traders thinks bulls missed a critical opportunityto influence the market in their direction Monday when they wereunable to fill in the chart gap up to $2.19. “That set the tone fortrading [today] and January never really had a chance.”

Others pointed to storage and weather, which continue to exerttheir downward pressure on prices. The Pegasus Econometric Group ofNew York thinks it is possible the market will see another netinjection in today’s American Gas Association Storage Report. Theirprediction calls for an net change of plus or minus 15 Bcf. “Thiswill inflate the year-on-year surplus to roughly 540 Bcf, a newhigh for the year,” the group said in their Natural Gas Reportdated Dec. 8. Last year’s report featured a net withdrawal of 69Bcf.

But a Houston marketer thinks the return to normal weatherremains the biggest news for prices this week. “But, what isnormal? It is all in how you look at it. It is going to be 15degrees colder than it was this weekend in many gas consumingregions and that has undoubtedly taken its toll on prices, butthose temperatures are just about normal for this time of year. Thequestion is whether prices will continue to rise on normaltemperatures or fall now that the actual weather is upon us? Butwhatever happens, the one thing you can count on is that wintervolatility has returned.”

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