With little in the way of fresh fundamental news, natural gasfutures slipped lower in a holiday-abbreviated session last Fridayas traders took profits following a six-day, $2.30-cent pricerally.

The January contract quietly shuffled lower for much of thesession only to be suddenly rocked higher and then lower in thelast 10 minutes of trading by successive waves of market-on-closebuying and selling. January closed at $9.579, down 25.1 cents onthe day. Meanwhile, losses were more pronounced in February, whichsunk 29.8 cents to $8.932.

Looking ahead to expiration week, traders were mixed Friday onthe direction of the market. While bulls contend that storage andweather news likely will point to further gains this week, bearsremain skeptical for technical reasons. Nymex local consultant IraHochman is a member of the latter group and points to February’sinability to stay above the $9.32-36 area as his proof. “I wouldsuggest selling against that area until the market can prove it canstay above [it]… If you remember the last time this happened,[January] dumped from $9.65 to $7.33.”

An even more bearish scenario, Hochman continues, would be inplace if February stays beneath the market’s new short-termmomentum number at $9.08. If, however, February is able to climbthrough that level, he endorses a strategy of buying February foran expected move to the aforementioned $9.32-36 area.

Alternatively, Susannah Hardesty of Indiana-based EnergyResearch and Trading remains bullish and points to the likelihoodof continued Arctic blasts of cold air along with a rapidlydepleting storage situation. Because of that, she believes thethird (and highest) of the autumn highs is still to come and willbe achieved on a move to the $11.00-13.50 level.

In light of the fact that a whopping 635 Bcf has already beenpulled from storage and December isn’t even over yet, analysts havebegun to speculate on how low storage could get at the end of thefirst quarter of 2001(see Daily GPI, Dec. 22). According to Hardesty, 544 Bcfwill be available come April 1 if the market withdraws at the six-yearaverage, 401 Bcf if the market withdraws at the same rate as lastyear, and a mere 251 Bcf if the market pulls at the same clip it didduring the winter of 1995/96. And if the market continues at theincreased rate it is currently withdrawing thus far this year (67%more than the six-year average), relative to prior years, storagelevels could be totally depleted, she said.

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