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November 20, 2001

SHORT COVERING CONTINUES AS TRADE SELLS . . .

 Natural gas futures worked higher in active trading Tuesday on the New York Mercantile Exchange. An overly optimistic opening call prompted early buying by local and short term traders, but trade and commercial accounts used the occasion to sell. Traders are anxiously awaiting the release of tomorrow's inventory report, and longer term traders see a potential market free fall. . .
 At the end of the day the December futures added $.061 to $2.852 per MMBtu, and the January rose $.045 to $3.041 per MMBtu. . .
 "It was a wild night on Access last night and prices were called 10 cents
to 11 cents higher so a number of local traders were long right at the open,"
said a New York floor trader. . .
 "There was a print of $2.91 in early trading, so that encouraged more traders to buy, but that turned out to be an error and $2.81 was the correct
print." . .
 "Trade and commercial accounts were active sellers in early trading and
that pushed prices down in early trading, but they were also sellers as
prices rose back to $2.75 to $2.77 at midsession." . .
 "I believe that the floor traders are holding a nominal long position. We're
hearing estimates of a 10 BCF draw to a 10 BCF build on the AGA report
tomorrow," he said. . .
 Other traders are assessing the economy for signs of greater demand for natural gas, and aren't terribly encouraged.
 "My indicators show that the worst of the economy is not behind us," says
Greg Parks, broker analyst with Refco, Chicago.
 "One of my clients says that if the AGA report tomorrow shows a build, that
the December natural gas contract will trade below $2.00 by expiration
(next Wednesday). In the absence of very cold weather, natural gas has at least 30 to 40 cents more to the downside. Demand is all heating related this
time of year," he said. . .
 "I'm looking for a small build in the AGA's to crack the market pretty hard," he said.









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