After gapping dramatically lower on the open, natural gasfutures took on the trajectory of a safe pushed out of a ten-storywindow yesterday as the market dropped to its lowest level sinceNov. 29. The expiring February contract was the hardest hit by theselling, crashing 96.3 cents lower to close at $6.293. The outmonths did not fair much better, as the 12-month strip tumbled$0.49 lower to close at $5.563.

Sources were quick to point to the one-two combination oftechnicals and fundamentals as reasons for the price slide. Onthree different occasions in the last two weeks the market hadtested, but failed to break beneath stubborn support at the $6.80level. During the Access trading session at about 8:45 a.m. (ET)Monday morning the February contract notched a $6.79 low and thatpaved the way for the market to open at $6.80 before spiralinglower throughout the regular open-outcry session.

However, technical weakness was not the sole cause of the priceerosion. Also of impact was a continuation of the bearishfundamentals that have plagued the market since the first of theyear. According to the latest six- to 10-day forecast released bythe National Weather Service, above-normal temperatures areexpected east of a line drawn from the western point of New YorkState all the down to east Texas. Meanwhile, below-normaltemperatures will be confined to the Pacific Northwest and extremenorthern plain states. The rest of the country is expected to seenormal readings, the NWS said.

Looking ahead, Susannah Hardesty of Indiana-based EnergyResearch and Trading believes the market still has some downsidepotential left and is advising her clients not to begin buying theout months yet. “We are expecting another low inventory number (-80to -110 Bcf ) Wednesday, relative to both prior withdrawals thisyear, the very heavy withdrawal last year of 242 Bcf, as well asthe seven-year average withdrawal of 149 Bcf,” she wrote in aSpecial Update for weekly subscribers Monday. She went on to saythat bearish weather forecasts from Strategic Weather Services aswell as Jon Davis of Salomon Smith Barney predicting warmer thanusual weather for the next one-to-two weeks are a contributingfactor.

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.