January futures gapped lower on the daily charts for the secondday in a row Tuesday by opening 11 cents less than Monday’s low.But in contrast to Monday’s downward price movement, yesterdayfeatured an upward price trend for the session. At the closingbell, the prompt month had climbed its way back up to $1.958-only1.8 cents off Monday’s settle.

Tim Evans of New York-based Pegasus Econometric Group remainsbearish despite yesterday’s constructive price action. Evans pointsto relatively low open interest of 219,634 as proof there is stilldownside potential. “There is an awful lot of money on thesidelines looking to go short under some type of scenario,” hesaid. Because of this, Evans feels any rally will be met withstrong selling pressure.

But how low can it go? For that answer Evans looks back to twohistorical levels-both in the $1.63 area. The most recent of whichis the October contract’s reactionary low of $1.63 from Sep. 2. Butfor a real perspective, Evans points to the January 1995 contractthat settled at $1.639, which incidentally was the last timestorage levels were as high as they are now.

Other sources agreed that in order for the market to rebound itneeds some sort of fundamental shock, such as a forecast callingfor below-normal temperatures or a larger-than-expected storagewithdrawal. Both could come as soon as this afternoon when theNational Weather Service (NWS) and the American Gas Association(AGA) release their Wednesday evening reports. Bullish traders arehoping the NWS has revised its current forecast calling forabove-normal temperatures through Dec. 10. But few think the AGAstorage report will offer much in the way of good news. Mostestimates call for a small injection of 30 Bcf or less, while oneChicago-area utility buyer thinks the market could see a netinjection. Either case would be less than the 36 Bcf drawdownduring the same week last year and would therefore increase theyear-on-year surplus, which now stands at 427 Bcf.

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