Despite higher early morning over-the-counter and cash market pricing, natural gas futures managed only to check sideways yesterday as traders were content to wait on the sidelines ahead of today’s release of fresh storage and weather information. The February contract closed at $2.281, 0.9 cents above Monday’s close and just about in the middle of its tight, $2.23-32 trading range. By comparison, the gains in the out months were larger, enabling the 12-month strip to post a 2.6-cent gain to finish at $2.585.

Buoyed by fund buying, the February contract retested Monday’s high at $2.35 yesterday during the early morning Access trading session. But for the second day in a row, sellers were waiting there to take advantage of the failed rally attempt. That left the prompt month to open the regular trading session rather inauspiciously at $2.31. But while the gains in Access trading had little or no effect on the Tuesday’s futures session, they did make a mark on cash market prices, which advanced despite moderating temperatures. Daily GPI’s Henry Hub price averaged $2.38, up 7 cents on the day.

Looking ahead, traders will undoubtedly take their next cue from this afternoon’s release of fresh storage data. Expectations are centered on a net withdrawal in the 145-180 Bcf range, which if realized, will fall inline with the 167 Bcf drawdown seen this week last year. Also of impact Wednesday will be updated weather information, which will either confirm or disconfirm prior forecasts calling for moderating temperatures next week. According to the six- to 10-day forecast released yesterday, normal and above-normal temperatures are predicted over the entire eastern half of the country extending into the southwestern U.S. The northwest quarter of the country, meanwhile, is expected to see below-normal readings.

On the technical front the outlook remains negative, says Cynthia Kase of New Mexico-based Kase and Company. While allowing for the possibility of short rallies to the $2.35 or $2.50 levels, Kase remains bearish. “Most likely a modest bounce will hold below about $2.36 and barring extreme events, a price of $2.49 should hold, she wrote in her Commentary on Gas dated Jan. 4. “Our next targets remain in the $2.10s. However, the overall structural patterns indicate a continuation downward to probably the $1.80s for February and March and the $1.90s for April is more likely than not.”

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.