Slightly constructive long-lead weather forecasts and animportant technical signal prompted natural gas futures to arrestdownward momentum yesterday and eke out a narrow gain in a quietsession. Many traders elected to wait on the sidelines for aclearer price picture to develop.

Thursday morning’s price action typically takes its cues fromthe Wednesday afternoon storage report, and yesterday was noexception as prices drifted aimlessly sideways-to-lower following aneutral 75 Bcf withdrawal. The April contract finished a tad higheron the day, up 1.6 cents at $4.927. Meanwhile, the out-monthscontinued lower, with the 12-month strip dropping 1.3 cents tofinish at $5.078.

Although weather forecasts are less important during theshoulder month period, the latest 30-day outlook, releasedyesterday by the predictions branch of the National WeatherService, was cited as a source of buying that lifted April futuresoff early lows. As the heating season morphs into the coolingseason, traders are looking for incremental gas demand either frombelow-normal temperatures in northern climes or above-normaltemperatures in southern areas of the country. Yesterday, themarket got the promise of both.

According to the Climate Prediction Center, above-normaltemperatures are expected during April across a wide swath of thesouthern half of the country from coastal Virginia all the way toSouthern California. Meanwhile, below-normal temperatures arepredicted across the Great Lakes region into the Upper Midwest.Further out on the horizon, the CPC expects the above-normaltemperatures to continue through August in the southeastern UnitedStates, the desert Southwest and Texas. During the latter half ofthe summer, the West is expected to heat up, with above-normaltemperatures expected from Seattle south to Arizona.

In daily technicals, April futures have support at Thursday’s$4.87 low, which corresponds exactly with a 61.8% Fibonacciretracement off the move from the $1.625 low etched in February1999 up to the $10.10 high notched during the last week of 2000.The market’s ability to hold above $4.87 yesterday gave Nymex localtechnician Ira Hochman the impression that natural gas could beforming a bottom. “We tested lower but could not break down andspent the majority of the session above the day’s midpoint. If wecan move above [yesterday’s $4.98 high] and above [Wednesday’s$5.10 high], this thing could have a chance.”

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