In a trading session book-ended by selling at the open and at the close, the natural gas futures market sunk to new 10-day lows Tuesday as traders continued to side with forecasts calling for a massive warming trend following the current spate of record cold in the Northeast U.S. At 74,623, estimated volume was stronger than it had been of late, adding credibility to the move lower.

The price weakness began in early morning Access trading and carried over into the first 30 minutes of the regular outcry session. After stabilizing for much of the midday, the February contract was pummeled below key support at $6.52 in the last 30 minutes of the session. It closed at $6.329, down 57.7 cents for the day.

Traders polled by NGI Tuesday were quick to point to forecasts calling for a warming trend as a central factor in the market’s two-day, 96-cent price slide. According to the latest eight- to 14-day outlook released Tuesday by the National Weather Service, above normal temperatures are expected across large portions of the Northeast and the northern Plains over the Jan. 21-27 timeframe.

And while moderating temperatures didn’t hurt the bears’ cause, it was just one factor Tuesday. Also weighing on futures prices was the surprising indifference in Texas and Louisiana physical market values, which turned lower again Tuesday despite ominous forecasts calling for the coldest air in a decade or more across much of the Mid-Atlantic and Northeast. NGI’s Henry Hub price finished at $6.25, flat on the day and still at a discount to February futures.

And while some would suggest that stronger Northeast prices exhibited Tuesday are an indication of the tight supply-demand equilibrium that exists in the market, not all market-watchers are convinced of this correlation. “The Northeast is tight due solely to infrastructure limitations and it has little to do with the supply of physical molecules,” said Citigroup analyst Kyle Cooper in a note to clients Tuesday.

However, the frigid temperatures late last week and again this week are undoubtedly boosting heating demand and market-watchers are anxious to see the impact on storage withdraws this week and last. Expectations for this Thursday’s storage report (covering last week) are centered on a net withdrawal of 155-200 Bcf, which would easily exceed the year-ago and five-year average draws of 136 Bcf and 141 Bcf respectively.

In daily technicals, Craig Coberly of GSC Energy in Atlanta makes the case that the move lower by February futures is merely the “C” down leg in an Elliot Wave chart pattern. “Although the wave pattern is such that the wave pattern could be complete at any time, $6.13 remains the most probably objective… Trading above $6.76 would be fair evidence the decline is complete,” he says, noting that a trade above $7.03 would be “near certain” evidence the downtrend has run its course.

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