Technical factors exert their influence on the natural gasmarket on a daily basis, confounding some traders while rewardingothers. Sometimes technicals are in agreement with underlyingfundamentals as was the case throughout the month of September,when supply tightness met with chart patterns and trend lines thatwere flashing buy signals. The end result: a rally that lifted theOctober contract 40 cents for the month. But, oftentimes thesefactors are not in concert, and trading thus far in October hasbeen just that. Whereas storm-related supply shut-ins supported themarket in September, October has been relatively free of supplydisruptions. That, coupled with U.S. storage inventories nearlyfull, has created an oversupply situation which has weighed onprices most of the month.

That put traders in a difficult predicament coming into tradingon Thursday. Do you believe bullish technicals or bearishfundamentals? Those that chose the latter were glad they did as themarket came under heavy selling pressure throughout the day whichprompted the November contract to drop 13.9 cents to settle at$2.254.

A marketer felt yesterday’s weakness was a rare case of thefutures screen following cash prices lower. “There is just a lot ofgas available and nowhere to take it. Storage is nearly full and nodemand to speak of.” Cash prices dropped throughout the morning andposted their lows near nomination deadlines. “You think that wasbad? You haven’t seen ugly yet-just wait until [Friday],” themarketer continued. He looks for the carnage to continue intotrading today and feels that Gulf Coast prices could plummet intothe $1.70s.

Susannah Hardesty, president of Energy Research & TradingInc. in Greencastle, Indiana views this move as part of a downwardcorrection that will be completed no later than next week on a moveto the $2.20-10 area basis November. She believes it is not toosoon to start looking for a bottom now, but admits “a projectedunseasonable cold front could be a fundamental factor helping toidentify the bottom of this move.”

©Copyright 1998 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.