Following a three-day, 30-cent price rally, the natural gasmarket cooled its heels yesterday as traders took profits amidtechnically oversold conditions and ahead of fresh storage data.That sell-off sent the January contract tumbling 9.9 cents lowerthroughout the session yesterday. By virtue of trading above, thenbelow Tuesday’s range it completed an outside-down day on the dailycharts to settle at $2.486.

The cash market, which has fueled gains all month, continued itsmeteoric rise, but futures could not follow and that left severaltraders to suggest that the futures were hit with a wave oftechnical selling yesterday. “The charts were extremely overboughton a daily basis,” a Dallas-based risk manager said. “[RelativeStrength Index] was very strong at 91 and anything over 80 is asell signal.”

Looking ahead, however, she believes that the trend is still upand feels it was constructive that the market was able to touch akey regression on the weekly chart at $2.475 Wednesday. “Prices hadjust moved up too fast, and needed to retrace a little. If themarket is able to move lower again today, it will attract buying atthe $2.31-33 level, which corresponds to a gap on the daily chartsfrom last week,” she said.

However, of more immediate concern may be fresh storage figuresreleased yesterday afternoon. According to the American GasAssociation, 73 Bcf was pulled from underground storage facilitieslast week, leaving 2,859 Bcf in reserves compared with 3,055 a yearago. At first glance the storage report appeared to have a bullishhue as the 73 Bcf in withdrawals was more than last year’s 49 Bcf,last week’s 69 Bcf, and in the top end of the 45-75 in marketexpectations. However, that did not seem to faze after-hourstraders last night as they took the January contract an additional4.6 cents lower to 2.44

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