After trading up to, but not through, stubborn resistanceMonday, natural gas futures eased yesterday as fund tradersliquidated a portion of their long positions amid bearish technicalconditions and ahead of warming temperatures expected in theNortheast U.S later this week.

The April contract was dealt the most severe blow, tumbling 5.1cents to settle at $2.809 after a brief foray below $2.80. Lightestimated volume of only 44,426 contracts may have exaggerated themove lower, sources said.

A Chicago-based trader looks for follow-through selling today totake prices a little lower ahead of the storage report to bereleased shortly after 2:00 p.m. (EST). “The market should comeunder some more selling and I think trendline support at $2.77 and$2.75 will come into play. From there, I am a bull, but the thingthat worries me is that I am not alone. Everyone I talk to thinkswe are headed to $3.00. The last time the market was in suchagreement was in February when everyone thought prices would headlower. I guess we saw how that played out.”

Alternatively, a seasoned local takes a slightly different tack.”We had a chance to shoot higher [Tuesday], but would have needed agap higher open,” said Sandy Trot of New York-based Trot TradingCorp. “The market spent some real time flirting with resistanceMonday and that set us up to open above resistance [Tuesday]. [Hadthat occurred], it would have triggered [buy] stops and we wouldhave seen $2.93 or possibly $3.00,” he said. But that scenarionever got a chance yesterday, and that puts him in a bearish modein the short run. “$2.75 is the big number. This thing needs tostay above $2.75 or we could be in for some more selling.”

However in the long run, Trot remains a stalwart bull,especially on the summer months. “They have thrown everything butthe kitchen sink at this market and it has sucked it up, beat itschest and continued higher. I got long July at $2.55 almost 2months ago and the market has never looked back. You get some powerprice spikes or maybe some early hurricanes this summer and thereis no telling what this thing is capable of,” he said.

As is usually the case, most attention will be focused on therelease of fresh storage data today. Opinions are varied as to whatthe American Gas Association will say this afternoon. Some sourceslook a withdrawal of up to 50 Bcf while others predict the AGA willshow little change in working gas or even a small net injection.Regardless, it is an almost certainty that the report will falldramatically short of last year’s 134 Bcf draw, and that will serveto narrow the 428 Bcf year-on-year deficit.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.