After cascading nearly 15 cents lower Tuesday and Wednesday,natural gas futures rebounded yesterday as traders ignored thebearish technical picture and focused instead on constructivefundamental factors. The August contract slipped at the close, butwas still able to post a 2.1-cent advance for the day to $2.162.

Traders were quick to point to the Wednesday afternoon releaseof fresh storage data as a supportive feature in market dealingsyesterday. The American Gas Association said that 69 Bcf wasinjected into storage last week and that figure fell short ofcomparisons with last year (74 Bcf) and market expectations (80-85Bcf).

Shortly after the storage report was released, the NationalWeather Service put another potential arrow in bull traders’ quiverwhen it released its latest short-lead forecast. Above-normaltemperatures are predicted on both East and West Coasts. The centerof the country, however, is expected to experience below normaltemperatures, the NWS said. And while Tim Evans of New York-basedThompson Global Markets likens the forecast to a very rare steak,”cold in the middle and hot around the edges,” he feels it might beenough to support prices in the short term.

“Natural gas has a fairly clearly defined bearish technicalpicture. What it doesn’t have is a bearish fundamental picture tosustain it.” Where have we seen this before, Evans asks. “Crude oilfutures-after falling for most of the month of May without anyreally truly bearish fundamentals-rebounded $2.50 off the lows. Hewent on to explain that while most fund traders had plenty ofincentive to sell the market based on pure technical factors, thereare those of them that resisted the temptation because of thebullish fundamental scenario.

It remains to be seen whether natural gas will receive thebuying support that crude oil did, and Evans admits it will facesome major hurdles along the way. The first one will come in the$2.22-25 area, which corresponds with prior lows from June 21 and28. If the market is able to move through that level, Tuesday’shigh of $2.325 will be the next level of resistance, he said.

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