After gapping lower on the open, natural gas prices continueddownward Monday amid weakness in crude oil prices and continuedmild temperatures expected this week and next. Bears saved theirbest for last and punctuated yesterday’s price statement with a4-cent sell-off in the last five minutes of trading. The Novembercontract closed at $5.364, down 17.3 for the session.

Several traders contacted by NGI were quick to point to thecombination of psychological (crude losses) and fundamental(weather) weakness yesterday as a reason for the price erosion.”The gap-lower open set the tone and weather and crude prices addedto the selling,” a Houston trader said. November Crude oil slippedmore than $2 to finish under $33 for the first time since lastMonday. Meanwhile traders were also eschewing the long side of themarket after looking at updated weather forecasts Monday morning.

According to the National Weather Service, most of the U.S. canexpect to see normal or above normal temperatures continue straightthrough the weekend and into next week. In fact, western Oregon isthe only area in the country expected to see below normal readingswhile a portion of the northern plains and Maine were expected tosee above normal temperatures, beginning this weekend.

However, low projected demand and sympathy crude selling werenot the only factors at work Monday. Bulls were also somewhat underwhelmed with the technical outlook. Not only did the Novembercontract gap lower yesterday, but it also tested short-term trendline support, which is drawn on the daily chart by connecting aseries of higher lows starting with the $4.98 low on Oct. 6. OnMonday, that support line is seen in the $5.36-37 area and Tuesdayit moves up to the $5.43 area, a chartist advised.

For Cynthia Kase of New Mexico-based Kase and Company, majorsupport for November exists first at $5.41 with an “extensiontarget at $5.31.”Resistance, on the other hand, is seen at the highclose of $5.63 and then again at the all-time November high of$5.78, she said.

At 6:22 pm (EST) last night, the November contract was 4.2 centsstronger at $5.406 and appeared poised to retest the aforementioned$5.41 level.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.