With temperatures across much of the East Coast pushing abovethe 70-degree mark yesterday, natural gas futures traders hadlittle choice but to take prices lower. But in contrast to lastThursday’s price direction, which had the trajectory of a safepushed out of a 10-story building, Monday’s market had a some lifeleft in it, enabling traders to trim losses throughout much of thesession. After reaching a low of $2.805 during the first 30 minutesof trading, the December contract battled back to finish at $2.914,off 4.7 cents for the day. Estimated volume was light with just57,373 contracts changing hands.

Traders said the lower opening and downward movement were aprolonged continuation of the price erosion that began last Thursday(see Daily GPI, Oct. 29) following therelease of bearish short and long lead weather forecasts (see DailyGPI, Nov. 1). However, not everyone isconvinced that another warm winter will mean lower gasprices. According to Raymond James and Associates, even if the winterof 1999/2000 is 10% warmer than normal, which is consistent with thepast two near-record setting winters, storage will still dip below 1Tcf by March 31 versus more than 1.3 Tcf this year. “Therefore, underalmost any warmer-than-normal winter situation, we remain confidentthat natural gas prices will stay above $2.50 throughout 2000,” thegroup predicted.

“It is ridiculous to write off this winter on the first day ofNovember,” commented a Chicago-area marketer in response toyesterday’s early sell-off. “Sure the weather is more indicative ofSeptember than November, but that can change in a hurry.” Hecontinued by pointing to long-term trend line support, drawn byconnecting lows from March, July, October and yesterday’s $2.805low, as a reason for the bounce in prices. “As long as the marketholds above support at $2.80, there is a chance for a retest ofhighs made this autumn.”

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