A constructive price move near the close of trading Tuesday anda well-bid over-the-counter market Wednesday morning had bullschamping at the bit early yesterday. But by afternoon, forecastscalling for a moderation of the cold weather gripping much of themiddle of the country had begun to filter through the futuresmarket which left prices to trickle lower. Both the December andJanuary contract slipped 4.6 cents, settling at $2.432 and $2.557respectively.

However, just as bearish traders were taking advantage of thewarmer weather forecasts, they received an unpleasant surprise inthe latest American Gas Association Storage Report. That reportfeatured a whopping 28 Bcf net withdrawal in the Consuming RegionEast netting a 24 Bcf overall draw-down. Preliminary estimates hadgenerally called for a net refill.

Tim Evans of New York-based Pegasus Econometric Group was quickto note that fundamental factors essentially “flip-flopped”yesterday. “Coming into the day, weather was bullish and storagewas bearish. Now weather is bearish and storage is bullish.”However he tempered that statement by warning whereas yesterday’sstorage report reduced the year-on-year surplus, it will bedifficult for that surplus to continue to dwindle in coming weeks.”The next two withdrawal figures from last year pose a realchallenge to the bulls.” Those withdrawals were 64 and 108 Bcf forthe weeks ending Nov. 14 and 21, 1997.

But, a Houston-based broker fully expected a net withdrawal.”Temperatures were colder than you think. Plus, even if there wasthe economic incentive to put gas into the ground it wasn’tphysically possible in most cases. What’s full is full.”

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