The bears were at it again at the New York Mercantile ExchangeWednesday when follow-through selling on the heels of Tuesday’sprecipitous price falloff took prices lower. The prompt Januarycontract gapped lower at the open and never looked back, posting a6.6-cent loss to $1.847 for the session.

Despite the hefty losses suffered over the past two days, bullstook solace in January’s ability to hold at support, which isclustered in the $1.81-83 area. January reached a low of $1.83yesterday. But those hopes were dashed last night when the AmericanGas Association (AGA) and the National Weather Service (NWS)released the Wednesday one-two punch to gas prices. For the secondweek in a row the AGA estimated a net injection of gas intounderground storage facilities. With a 27 Bcf refill, total storageis back up to over 3.1 Tcf or 96% full. And because injections overthe last two weeks are being compared with withdrawals from theprior year, the year-on-year surplus has risen to a record-setting567 Bcf.

Tom Saal of Miami-based Pioneer Futures admits that storagesurplus will be a huge obstacle for higher gas prices in the monthsahead. However, he thinks the revised short-term weather forecastsmight have been a tougher pill for bears to swallow. “Last week the11-to 15-day forecast called for below-normal temperatures for mostof the country, but now the 6- to 10-day forecast, which covers thesame time frame, has been revised [to] above-normal temperatures.”

Despite those undeniably bearish factors, prices did not spikelower in last night’s Access session. Saal attributes the pricestickiness to strip buying. “People see an area of good value when12-month strip prices get near the $2.00 mark.” Nonetheless hefeels once buying dries up the market will be susceptible tofurther softening.

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