After halting a three-day, 25-cent price slide Tuesday, naturalgas futures slowly began to build yesterday what bulls would liketo think is a base on which further gains will be added. Andalthough it is far from universal, that sentiment was echoed byothers who think that the confluence of relatively strong cashprices and rallying crude oil prices are supportive factors fornatural gas. The April contract finished 3.1 cents higher at $1.748in light trading.

Cash market prices, which many feel have paved the way for thefutures market to rebound off February lows this month, experiencedlittle or no change yesterday. But that was not a surprise to aDallas marketer who reasoned that the cash market was waiting forthe futures to catch up. “We saw good convergence today withfutures coming in line with the cash market. It will be interestingto see if the cash market can respond by pressing higher[Thursday].”

A California trader is bearish in the long run but admits themarket could be ripe for another rally in the short-term. Despitehis bearish disposition since the middle of last year, herecognizes that natural gas could be a very dicey sell right now inthe face of the rally in crude oil prices. “As a speculator notonly does the rally in the energy complex make you hesitate goshort, but it also entices you to try to catch the sympathy rallyby going a little long natural gas.”

And as is the case on any Wednesday, the real juicy market newswas withheld until after the close of regular trading. The AmericanGas Association (AGA) released its latest storage inventory reportwhich estimated a net withdrawal of 134 Bcf for last week. The vastmajority of sources were unfazed by the drawdown, noting that itwas within the wide swath of market expectations in the 100-147range just 9 Bcf short of last year’s pull. There currently is1,459 Bcf of working gas in storage, which is 355 Bcf more than atthe same time last year.

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