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To: The Ox who wrote (94307)	10/23/2001 6:54:53 PM
From: The Ox	Respond to of 95453

NYMEX Natural Gas Review: Softer as short covering abates By Allen Sykora Chicago, Oct. 23 (FWN) - Natural gas futures turned lower as the market began to run out of short-covering steam, sources said. In addition, contacts cited industrial selling in the aftermath of the recent run-up in prices. *** November natural gas traded up to $2.86, its highest level since Sept. 14, early in the session. But then it turned south and finished with a loss of 12.6 cents to $2.681. "The story there is that we ran out of short covering," said Tim Evans, senior energy analyst with IFR Pegasus. "We've sort of been in an intermediate-term rally mode based on some colder-than-normal weather forecasts that we got last week, and the high level of speculative shorts ... were vulnerable to a rally. That process seems to have run its course here." Technically, said Evans, the market saw an "outside-down reversal." The November futures first took our Monday's high of $2.84. But they couldn't hold that level and eventually broke down below Monday's $2.65 low, falling as far as $2.63. "Technically, that's usually a fairly reliable sell signal," said Evans. "It will be difficult for the market to recover from that in the short term." The analyst noted that the market consensus expectation for Wednesday's American Gas Association report is an injection of around 50 to 55 bcf. That would be slightly less than the 71 bcf injection from the same period a year ago, said Evans. But, he pointed out, year-on-year comparisons are somewhat tricky since as of last week, supplies were already taking up 92% of capacity. "We're at a very high level of storage, and that might be more important than the weekly comparison," he said. "The year-on-year surplus might slip a little bit, but you have so much inventory on hand that the market has difficulty sustaining the recent (price) levels." Some traders have commented that they figured the market would have a hard time continuing to make upside progress due to that fundamental picture, with the large inventory build so far this year. Gerry Saccente, trader with ABN AMRO Chicago Corp., explained that selling finally set in after some market participants began to conclude "we've probably gone far enough" to the upside. "You reach a certain point where people say 'I'm willing to sell my gas at that price,'" said Saccente, citing industry selling while speaking about the time prices were falling.