All the ingredients were present for natural gas futures tocontinue higher yesterday: momentum from last week’s advances,single digit temperatures in much of the West and Midwest and achart gap that was “just waiting to be filled.” But all of thosefactors, plus the official start of winter, were no match for theoverabundance of stored gas. After a brief attempt at last week’shighs the market came under strong selling pressure on Monday. Theprompt January contract slipped 12.7 cents to settle at $1.947.

“This thing sure threw some people for a loop,” a Gulf Coastmarketer lamented. I guess last week’s rise was ‘the rumor’ andtoday was ‘the fact’,” he said referring to the often quoted “buythe rumor then sell the fact” trading scheme.

However, a New York analyst was not surprised by the priceaction yesterday. “The market was at a short-term crossroads[Monday]. Last week’s gains put the market near several levels ofresistance on the charts. So it was up to the buyers to set thedirection early. Once the bulls flinched, the market was an easysell, and fund groups were eager to increase their shortpositions,” he said.

Looking ahead, the same factor many felt would buoy pricestoday, may actually become a bearish factor later this week.Although many parts of the nation are experiencing below-normaltemperatures now, the National Weather Service six- to 10-dayforecast released Monday calls for a warm-up to finish out theyear. A track of above-normal temperatures are expected from Maine,down the Atlantic seaboard, and across to the Southwest region. Asmall area centralized in the Dakotas, spreading into Minnesota andMontana will be all that remains of the below-normal temperaturesof this week.

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