After gapping lower at the open, natural gas futures followed aslippery downward slope yesterday as traders liquidated positionsamid bearish technicals and ahead of warming temperatures expectedlater this week. In contrast to light selling seen last week,yesterday’s weakness manifested itself across the entire strip ofcontracts, led by the May contract which tumbled 7.6 cents to$2.744. Comparatively, the prompt contract eased 7.1 cents to$2.714 and the 12-month strip gave back 5.4 cents to $2.867.Trading was active, with an estimated 63,810 contracts changinghands.

In addition to weather and technical concerns, cash prices,which slipped by as much as a dime in some Gulf locations, werealso blamed for the price weakness. NGI’s Henry Hub average fortoday is a $2.73, 8 cents less than for the weekend.

However, while some sources were looking at physical prices,others were reviewing daily bar charts and the clues they hold. “Wegapped lower and then broke below support at $2.75,” said ananalyst of yesterday’s $2.76 open and subsequent move to $2.71.”Once it broke, lower [April] ran into all sorts of sell stops,” hecontinued.

Cautiously bullish in the long run, Cynthia Kase of NewMexico-based Kase Trading does not rule out a moderate or even deepcorrection in the short term to the $2.65 or $2.495 levelrespectively. “The reason for our more negative view is thepreponderance of unfavorable signs, including weakness next winter,with December and January making lower highs [last] week andgapping down on Friday.”

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