Amid revised forecasts calling for warmer-than-normal weatherthrough mid-month, natural gas futures prices plunged yesterday astraders took advantage of a gap lower open and quickly pushed theMarch contract to its $1.00 lock-limit down. After being halted forthe Nymex-mandated 15 minutes, trading resumed at 11:15 a.m. (ET)yesterday with new $2.00 limits on either side of Friday’s $6.743March close. Additional selling was seen at the close, demoting theprompt month to $5.706, a $1.037 loss for the day.

Traders were quick to point to an updated weather forecast fromprominent industry forecasters Jon B. Davis and Mark Russo ofSalomon Smith Barney as a reason for the price slide. Clarifyingrumors of a Siberian cold front that were circulating around energytrading floors last week, the SSB forecast released yesterday saidthat while this parcel of cold air would gradually shift from Eastto Western Hemispheres, it would likely stay in Northern andCentral Canada and north of the United States.

“As a result, there will not be any major Arctic intrusionmoving down into the lower 48 through the middle portion of thismonth.” Instead, SSB looks for stormy and normal-to slightlybelow-normal temperatures in the West to be contrasted by normal-toslightly above-normal temperatures in the central and eastern U.S.

In daily technicals, March closed just beneath last week’s keysupport level of $5.74. Although last week’s absolute low for theregular, open-outcry session was a $5.65, technicians have keyed inon $5.74 because trading below that level was almost non-existent.That said, any sustained development below $5.74 could lead to amove down to a post-Thanksgiving low from the March chart down to$5.33. However, if March can rebound slightly to trade above the$5.74 level, traders look for a little bit of a rebound. Resistanceexists at the top of the yesterday’s gap up to $6.43.

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