Buoyed by a late short-covering rally natural gas futuresstruggled back up to just below unchanged yesterday as traderschose to wait on the sidelines ahead of the release of freshstorage data. The closing up-tick was the only feature bulls couldstomach in a market preoccupied by continued mild weather acrossmuch of the country. The February contract finished down 0.8 centsat $2.168 following a session that saw prices match Tuesday’s $2.20high but plumb a half-cent below Tuesday’s $2.13 low.

Cash prices, which can make or break the futures market duringthe winter months, were uncharacteristically quiet yesterday,traders said. NGI’s Henry Hub daily average for today is a $2.16.”Cash tried to stage a rally today, but the buying just wouldn’tsupport it,” said a Texas marketer. “There is just too much gas outthere,” he reasoned. Another trader took it a step further andbelieves there was an abnormally high amount of gas bought baseloadfor the month by buyers concerned with potential Y2K supplydisruptions. Because no such supply problems have surfaced, hebelieves there is a gluttonous level of gas in the market.

For some the more imminent problem is not the actual supply inthe market, but rather potential supply, which sits in undergroundstorage facilities. Following last week’s 133 Bcf withdrawal, theAmerican Gas Association estimates 2,437 Bcf is still in theground. While some contend that the 2,437 Bcf level is bullishbecause if falls short of last year’s 2,645 mark, others argue thatit is bearish because it is well north of the six-year average forthis week of 2,216.

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