After climbing by $1.01 in Wednesday's market-shocking regular session, January natural gas futures aimed to take some of that excess back in trading on Monday.

The newly-minted prompt month hit a low of $7.785 in Monday morning trading before climbing slightly in the afternoon. As of 12:30 p.m. (EST), the January contract was trading at $7.90, down 73.9 cents from Wednesday's $8.639 settle.

Despite the action Monday, much attention was still being paid to Wednesday's surprise rally and storage draw. At noon on Wednesday, the Energy Information Administration (EIA) reported that 49 Bcf was pulled from storage for the week ended Nov. 19. The number fell so far outside of anyone's expectations -- from a 25 Bcf withdrawal to a 15 Bcf injection -- that market watchers were looking to the EIA for some sort of explanation.

The EIA's Bill Trapmann said that the agency has received a lot of calls and will "certainly look at anything and everything about (the report) to address it." However, he added that the EIA has a policy of not correcting errors between its weekly reports, meaning the market will have to wait until at least Thursday to find out if the report was valid.

While a number of market watchers have been attacking the validity of the EIA's storage report for the week ended Nov. 19, Kennedy had a different explanation for the run-up last Wednesday.

"Maybe more realistically, that rally may have had nothing to do with the EIA report," he said. "I don't think the funds pay that much attention to fundamentals. Since the buying was funds, it could have been more technically driven."

Referring to Wednesday's run-up as "rapid short covering by funds," Ed Kennedy of Commercial Brokerage Corp. in Miami, said Monday's drop off was the work of those very same funds.

With funds being strictly number driven, Kennedy said last Wednesday's rally could have been funds feeding on buy stops. "Their numbers were hit and then they just moved," he said. "Realistically, it could have nothing to do with the report. I know that there are some people out there that think that fundamentals are the only thing in the market and technicals don't matter. That is just simply not true....Now the funds are right back in selling it again.

"There is also a little bit of illiquidity in the market, which you can see reflected over in the implied volatility in the options, which sky-rocketed on Wednesday," he added. "I don't think it will be coming down with this action today."

Kennedy said the funds idea makes sense because with storage as full as it is, the only thing that is important at this point in time is the weather forecast. "The current forecast says it is going to be a little below normal temperature-wise in the Great Lakes, so what," he said. "There's still plenty of gas in storage and there is no shortage of supply."

Kennedy will be going into more depth on the complex natural gas futures market Dec. 8-9, when he will be teaming with Commercial Brokerage's Tom Saal and Sandy "Trot" Goldfarb of Energylinks Futures LLC. These three well-known veterans of the gas world will go beyond the usual hedging and risk management tutorials to reveal today's techniques for identifying price trends and market timing, including the use of both fundamental and technical market indicators.

The two-day workshop will take place at the New York Mercantile Exchange in New York and will include the opportunity to have a bird's eye view of the gas trading pit when the weekly EIA storage data is released Thursday.

For a complete program description, or to register online for the Workshop at Nymex, visit http://gasmart.com/workshop/ , or call 1-800-427-5747.

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