The price tug of war continued yesterday in the natural gas pitat Nymex, but in contrast to the previous seven sessions, bearswere victorious Wednesday as commercial sellers were too much forlocal buyers. After it was apparent the highs for the day had beenset, locals quickly changed their colors and were seen adding tothe selling pressure in a round of afternoon profit-taking. TheSeptember contract slid sharply at the close, settling down 4.4cents at $2.704.

Ira Hochman, a technician with New York-based Trot TradingCorp., said there was a round of technical selling in the $2.73-75area Wednesday that ushered the market lower. “This market may havegotten a little bit overdone to the upside and could be in positionfor a little correction back into the low- to mid-$2.60s.” However,in the long-term he remains unflinchingly bullish, citing themarket’s ability to form a solid base below $2.00 followed by aseries of higher highs and lows on the weekly continuation chart.”Once we can get past $2.81, $3.85 becomes the next objective,” hesaid.

But technicals are not the only factors traders look at whenmaking their decisions. Fundamentals such as weather and storageare also big factors and that rang true yesterday as the marketeagerly awaited the weekly storage report. According to theAmerican Gas Association, 45 Bcf was injected into undergroundstorage facilities last week bringing the total to 2,351 Bcf, or 81Bcf more than a year ago. But the figure that drew most concern wasthe 1 Bcf withdrawal in the producing region, which follows lastweek’s 11 Bcf drawdown.

A bullish surprise, said Ed Kennedy of Miami based Pioneer. “Iwas looking for a net injection of 54 Bcf, but did not expect thatthe market would make another net withdrawal in the producing area.There are rumors out there that a large marketer is ringing theregister by selling storage gas that was injected at a considerablylower cost than what is prevalent in the market right now. “Saytheir average cost of gas in storage is $2.25. Why wouldn’t youtake advantage of a half dollar profit right now?”

Initially at least, Kennedy was not the only one who thought thereport was bullish. At 7 PM last night the September contract wasup 4.9 cents to $2.753 in after-hours Access trading.

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