Following the extended holiday weekend, February natural gas futures pushed lower once again on Wednesday as near-term weather for much of the country still seems more suitable for water skiing rather than snow skiing. Trading between $6.140 and $6.290 on the day, the prompt month ultimately ended up settling at $6.163, down 13.6 cents from Friday’s close.

Despite the 13-cent-plus drop, some market watchers were surprised the contract didn’t fall even more in sympathy with crashing liquids futures. February crude plummeted $2.73 on Wednesday to close at $58.32/bbl while February heating oil decreased by 6.01 cents to $1.5881/gallon.

“The drop in natural gas on Wednesday was not too bad considering the meltdown in petroleum futures,” said Jay Levine, a broker with enerjay LLC. “The big story continues to be the exceedingly mild weather for much of the country.

“The fundamentals are overwhelmingly bearish, but the slightest hint of a shift would be enough to help turn the psychological and technical tides,” he added. “However, we are not getting that right now as the weather picture remains overwhelmingly mild. That is continuing to put a lot of pressure on the natural gas futures market. It is the same old thing where generally mild temperatures are keeping the lid on any price advances, making it doubly hard to mount any kind of recovery, if not sustainability.”

Despite the recent weakness trend, Levine said he still sees the bulls in control in the long run. “While the fundamentals continue to weigh on the market in the short term, I still think the long-term market is a bull due to the times we are living in,” he said. “Let’s face it, long-term demand is still on the upswing and there is nothing cheap about current prices. I am still long-term bullish.”

Market technicians who study seasonal patterns suggest that a typical preseason rally may not be in the cards this year. “From the Q4 preseason rally peak natgas typically declines into a late January to early February low and begins its cooling degree [day] demand preseason from there,” noted Walter Zimmerman of United Energy. However, this time may be different. Zimmerman said that major 2.5-year and four-year cycles for natural gas prices show a maximum bearishness between February 2006 and the fourth quarter of 2007, and under those conditions the market may not be able to generate a typical preseason rally.

“In fact, the time cycle influence suggests that this year may not give much of a preseason rally at all. So near term when we see a potential doji star bottom on the spot weekly chart, but no such bottom reversal pattern on the individual contract month charts, we are more than skeptical of the ability of natgas to carve out a bottom and launch a rally from here.”

Short-term weather patterns look to keep the bulls corralled. Major energy markets of the East Coast look to be far warmer than normal. “With the jet stream over eastern Canada and an area of high pressure moving off the North Carolina coast, the Eastern Seaboard will enjoy unseasonable warmth and dry weather…into Thursday,” said Kristina Baker, AccuWeather meteorologist. According to Baker, highs will be a whopping 10 to 20 degrees above typical early January levels “ranging from the 30s over northern Maine to the lower 80s in South Florida. The mild air will continue to dominate the region through at least the start of the weekend, preventing any wintry weather.”

Looking at the storage report for the week ended Dec. 29, a Bloomberg survey revealed a 62 Bcf withdrawal expectation, or about half the five-year average. The Energy Information Administration is releasing the data on Friday instead of Thursday due to the recent holidays.

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