In a topsy-turvy trading session conspicuous only for its lack of bullish leadership, natural gas futures slipped lower Wednesday amid two waves of long liquidation. An early afternoon rally was about all the buyers could muster, and it was overshadowed by selling at the market’s open and again heading into its close. March finished at $5.785, down 19.2 cents for the session.

After dropping lower in step with crude oil Tuesday, natural gas stayed the course lower Wednesday while crude rebounded to a fresh 26-month prompt contract high. March crude ended the session up 33 cents at $35.77.

Several traders contacted by NGI Wednesday were surprised natural gas futures ability to move lower despite the strength, not only in crude oil, but also the physical gas market. The coldest air since late January was sweeping across into the Northeast, upper Midwest and Mid-Atlantic Wednesday and temperatures are not expected to rise above the freezing mark for most of that corner of the country until this weekend at the earliest.

However, as its name suggests, the futures market was looking ahead at the possibility of a warm-up next week. According to the latest six- to 10-day forecast released Wednesday by the National Weather Service, normal and above-normal temperatures next week will replace the below normal readings experienced by the eastern half of the nation this week.

But moderating temperatures were not the sole factor behind Wednesday’s sell-off. Also at work, sources said, were technical factors which gave sellers the green light. “We made a high of $6.11 in Sunday evening access trading. When we could only get back to $6.07 [Tuesday], it put us on alert that we could be in for some profit-taking, said George Leide of New York-based Rafferty Technical Research.

While Leide considers the bulls’ performance over the past couple days “disorganized” and “disappointing,” he is not yet ready to throw in the towel on the uptrend. “It is just too early to tell if this is a full reversal. I would not be surprised if [the market] went back down to the $5.47-50 area before making another leg up. There is a pretty good vacuum above $6.12 that runs all the way up to the $6.75 zone.”

However, to take advantage of a move down to the $5.47-50 level, Leide does not endorse liquidating longs immediately. Instead, he suggests lightening the load or establishing fresh shorts on a break of the $5.70 level.

But even technical factors will be secondary in traders minds when fresh storage data is released by the Energy Information Administration Thursday morning. The common range of market expectations is for a draw of about 160 Bcf, which would fall between the five-year average draw of 113 Bcf and the year-ago figure of 172 Bcf. The absolute range of expectations this week is enormous, however with Tim Evans of New York-based IFR Pegasus calling for another 200-220 Bcf draw and Thomas Driscoll of Lehman Brothers looking calling for a modest 135 Bcf takeaway.

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