Despite cold temperatures both outside and in the latest mediumrange weather outlooks, natural gas prices shuffled lower yesterdayin an extremely quiet trading session. After failing to retestWednesday’s highs yesterday morning, the April contract succumbedto light selling throughout the afternoon. Estimated volume of just32,117 contracts confirmed the thin trading activity.

Several traders were surprised by the market’s inability totrend higher Thursday despite the release of probably the mostbullish weather forecast since late December. According to thelatest eight- to 14-day forecast released by the National WeatherService, the entire Western half of the country is expected to seebelow normal temperatures. In the East, mostly normal temperaturesare expected. Sources said that the prominent private forecasters(Strategic Weather Services and Salomon Smith Barney) called for asimilar weather pattern.

In addition to the supportive weather news, traders are cautiousthat large storage withdrawals, relative to last year, could alsoboost prices. Prices dipped Wednesday afternoon after the marketlearned that a whopping 101 Bcf had been pulled from the groundlast week, but it didn’t phase Tim Evans of New York-based IFRPegasus. “We think [storage] will become a supportive trend, as theupcoming 37 Bcf and 31 Bcf comparison figures from last year shouldbe relatively easy to exceed.. The initial price reaction followingthe data suggests that there are those still doubting that thetrend in the intermediate-term fundamentals has changed. We thinkthey’ll regret that view later.”

That said, Evans sees potential resistance at $5.385 and thenagain in the $5.47-50 area. Further selling is likely at $5.77-80on a move higher, he said.

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