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November 26, 2001

STILL LOWER . . .

 Natural gas futures ground lower in uninspired trading Monday on the New York Mercantile Exchange. Prices opened sharply lower as traders digested the latest NWS weather report showing moderate temperatures over most of the US. A lack of trade participation gave locals and short term traders some flexibility to push prices off session lows. A lower open is expected tomorrow. . .

 At the end of the day the December futures dropped $.117 to $2.696 per MMBtu, and the January lost $.056 to $2.935 per MMBtu. . .

 "We came in lower on the weak NWS 6 to 10 day forecast which shows everywhere but the Great Plains above normal," noted Jim Duffy, trader with GasLink, New York. . . .

 "The locals realized that volume was thin so they pushed prices higher
and managed to trigger a small number of stop loss orders. They weren't
fund stops or anything like that." . .

 "What was surprising was that there were not trade and commercial offers
up top willing to offer the market lower," he said. . .

 "It's my read that the funds and managed accounts are still short as well
as the trade. It's hard to figure out who is long this market." . .

 "We got more phone calls today asking who was buying than anything else,"
he said. . .

 Other traders see prices working lower as well. . .

 "I don't believe we've seen the bottom to this market," says Harvey Budkofsky, broker analyst with Salomon Smith Barney. . .

 "There may be some more short covering, for marketers are trying to hold
the market up the best they can. Technical resistance is the $2.87 area for
the December and $3.02 to $3.03 for the January," he said. . .

 "I believe for a physical market long who hasn't hedged that those would be
good levels to sell up against," he suggested.





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Bill Burson
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