After failing to move above last week’s high despite a positive open, the natural gas futures market turned lower Monday as speculative traders reestablished short positions. Concerns that this week’s storage report will feature a small net drawdown also added to the bearish price sentiment, prompting buyers to pull back their bids.

The April contract was the hardest hit by the selling, dropping a nickel to close at $5.393.

“Funds were the featured sellers [Monday],” according to Tom Saal of Miami-based Commercial Brokerage Corp. “When it became clear the market would not move above last week’s high, the funds were there to push it right back down.

Saal pointed to the depressing effect this week’s storage report may have on the market. “Early talk is centered on a 30-60 Bcf withdrawal. A number in that range will not be price supportive,” he said.

In addition to falling short of the year-ago and five-year average draws of 102 Bcf and 75 Bcf respectively, a smallish storage draw would be proof that winter is over and the market is ready to begin its shoulder demand period, Saal continued. “Spring is just around the corner and we are seeing some shoulder month kind of weather. You can see that the anxiety [over a winter price spike], is out of the market. I wouldn’t be surprised if we tested $5.26 [Tuesday].”

But should Saal’s price forecast ring true, it would not necessarily inflict any real damage to the uptrend, notes Craig Coberly of GSC Energy in Atlanta. “In the very short-term, gas is undergoing what should prove to be a very brief pause within this larger upward trend…Trading below $5.20 would certainly not support the…bullish outlooks, but it takes a trade below $5.03 to convincingly prove them wrong.”

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