Groundhog

Despite Punxsutawney Phil’s prediction on Groundhog Day of a longer winter, the near-term outlook for natural gas is “very bearish,” Raymond James analysts said Monday. The second half of winter and the rest of 2008, they said, “will be ugly for gas prices.”

Borrowing the premise from the 1993 movie Groundhog Day in which Bill Murray’s character is doomed to continually repeat the same day of his life forever, natural gas futures traders find themselves continuing to assault $8 psychological resistance in the December contract only to experience the same result each time — failure. On Monday the prompt month reached a high of $8 in afternoon trading before sinking to close at $7.894, up a dime from Friday’s close.

Amid revised forecasts calling for warmer-than-normal weatherthrough mid-month, natural gas futures prices plunged yesterday astraders took advantage of a gap lower open and quickly pushed theMarch contract to its $1.00 lock-limit down. After being halted forthe Nymex-mandated 15 minutes, trading resumed at 11:15 a.m. (ET)yesterday with new $2.00 limits on either side of Friday’s $6.743March close. Additional selling was seen at the close, demoting theprompt month to $5.706, a $1.037 loss for the day.

The groundhog must have chewed a hole into a CNG storagefacility, judging from the massive withdrawal that the American GasAssociation reported last week. At 242 Bcf, the withdrawal ranks asthe third largest since AGA started its survey six years ago. Itwas the largest for the last week in January.