The near two-week futures rally from an apparent winter lowcontinued yesterday during the regular trading session helped by amajor winter storm that swept through the Midwest, Mid-Atlantic andNortheast and about a dime rise in cash prices. The April contractbroke through strong resistance and posted a new high of $1.965before backtracking to a low of $1.885 and then rebounding to closethe day up 1.3 cents at $1.941/MMBtu. A less-than-expected storagewithdrawal of 69 Bcf, however, helped push futures down sharplyduring the overnight Access trading session. As of 6:30 p.m. (EST),April was down 4.1 cents from the close to $1.900.

Several observers said the AGA storage report may trigger ashort-term setback. Most analysts were expecting between 90-130 Bcfof withdrawals. The AGA reported that storage as of May 5, was 49%full with 1,593 Bcf of working gas, 346 Bcf more than at the sametime last year.

Susannah Hardesty of Energy Research & Trading Inc. said sheexpects the small withdrawal to have a minimal impact because ofthe upward momentum established over the last two weeks. “I wouldsay this [storage report] would be viewed rather neutrally,” shesaid. Late last week the contract hit some significant technicalbuy signals, including hurdling the 40-day moving average, whichstarted to pull a major short position out of the marketplace.

“What all this is telling me is that the upside potential forthe April contract by the time it goes off the board is from$2.05-$2.25. I would say we may go to the upper end of that becausethe reports that I’ve been seeing on the weather today… arereally looking for this cold in the East to just keep oncontinuing.”

“I think this [storage report] catches a few people long. Ithink we’ll see some corrective action tomorrow,” said anotherfutures analyst. “This [storage report] was on the low end ofeveryone’s expectations.

“This is a market that has gone up 34 cents in eight sessions,from $1.625 on Feb. 26 to $1.965 yesterday without a correctionsomewhere along the way. I think in the short-term it’s a littleoverextended to the upside.”

However, he noted that on the other side of the coin theNational Weather Services’ six- to 10-day forecast is calling forbelow and much below normal temperatures for the southerntwo-thirds of the nation with most of the remaining sectionexpected to experience normal temperatures.

“I’ve seen more bullish weather reports. I mean it would be niceto turn it upside down and have the below normal temps in the bigmarket areas, but it’s not a bad forecast.” He is expecting aslight pull-back in the April contract starting today to at least$1.80, but possibly $1.75, before a return to a bullish long-termtrend. “I’m certainly not looking for an immediate resumption ofthe downtrend.”

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