After failing to fill in a looming chart gap on the daily chartsduring Sunday night’s Access trading session, natural gas futuressank lower for much of the session Monday, as day traders rotatedto the short side of the market. That selling pressure enabled theFebruary contract to trim all of Sunday’s advances, finishing 0.2cents down on the day at $7.457.

Created when one day’s trading range falls completely above orbelow an adjoining day’s range, a chart gap is a technical featurethat receives plenty of attention by natural gas traders and marketwatchers alike. In this case, it was the $7.90-94 gap created lastWednesday that had traders on watch.

For George Leide of New York-based Rafferty Energy Group, $7.94was a key level. A break above $7.94 and the market could havecontinued higher, a failure to move above $7.94 would signal thatbears were in control. As it turns out, the latter scenario wasplayed out Sunday evening, as February only reached a $7.93 high,leaving sellers to take prices lower Monday, he said.

After watching prices tumble yesterday, Leide is “neutral tobearish” on futures prices for the intermediate-term. To that endhe looks for the market to test, and likely fill another chart gapcreated last Friday down to $7.22. Once filled, the $6.80 level isbears’ next objective. Below $6.80, February has technical supportat $6.65, $6.25 and then again at $5.75, he added.

However, his prediction is not based solely on technicals chartpatterns. Also of note is what he calls a series of unfavorable (ifyou are a bull) year-on-year storage comparisons. Specifically, theAGA reported for the next three weeks last year that a whopping 650Bcf was pulled from underground storage facilities. And while it isdifficult to predict, exactly how much gas will be pulled fromstorage during that same period this year, it is safe to say thatthe market will be hard-pressed to duplicate that effort, he said.Accordingly, he estimates that this week’s pull will rangesomewhere between 103 Bcf and 135 Bcf, one-third or less of the 195Bcf. seen a year ago this week.

According to estimates by Robert Morris of Salomon Smith Barney,the AGA will report a 130 to 145 Bcf withdrawal Wednesday, trimmingthe oft-quoted year-on-year storage deficit to less than 700 Bcf.Temperatures last week were roughly 3% warmer than last year and2.3% cooler than the 10-year average.

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