The surprisingly small storage withdrawal last week of 69 Bcf,as reported late Wednesday by the American Gas Association, tookthe blame for a 12.1-cent tumble in the April Henry Hub futurescontract yesterday. Most observers were expecting about 110 Bcf tobe withdrawn, so the AGA report was enough to trigger along-awaited correction. Heavy selling sent the front-month Nymexgas futures contract cascading down throughout the day to a low of$1.810 before closing at $1.820.

“I could see [April] getting back to say $1.795 to $1.755 [onFriday], and basically making a 50% correction to the downsidebecause of what happened today,” said one analyst. “But none of mymajor trend-following systems are saying we’ve had a majordirectional change back to the downside again. We did havebasically eight up-days in the market and then we got a negativereport. I didn’t hear anything else negative in the marketplacebeside the AGA storage number.

He is expecting the correction to hit bottom early Friday andthen give way to some short-covering for a rebound going into theweekend and higher prices next week.

A broker said he too expected the downturn to continue Fridaymorning, but he said it would be surprising if the contract crossedbelow the 40-day moving average at $1.807.

“I think we got a little ahead of ourselves on that last rally,”said Ed Kennedy of Pioneer Futures. “One of the things we noticed[Wednesday] was that the funds had stopped buying and I think thatcreated a bit of a vacuum in the market and we saw some profittaking today. The thing that bothers me here is the weatherforecast for the weekend. I don’t think weekend cash is going to bethat weak.”

The National Weather Service’s six- to 10-day forecast isbullish, calling for below normal and much below normal temps forthe lower half to the lower two-thirds of the nation. NWS’ 11- to15-day outlook is calling for a warm-up. “But the weekend weatherforecast could change all that,” Kennedy noted.

“They’re calling for a major Nor’easter coming down the EastCoast. I would expect cash to be firm tomorrow if not strong. Thatbeing the case I question how much downside we have here fortomorrow. In any way, shape or form, I think the lows are in placefor natural gas for the time being. Tomorrow [we should see] someshort covering and then maybe testing of the mid-70s, unless thissnow storm heads up through the Northeast.”

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