After etching a dramatic six-day, one-dollar price slide, the natural gas futures market rebounded modestly Tuesday as bargain buying entered the fray. With short-range weather forecasts unchanged and fresh storage data still a day out, market watchers agreed that the uptick was due to the market’s perception that sub-$5.00 might be a good purchase should this winter turn out anything like last winter.

The November contract led the advance, gaining 10.3 cents to close at $4.875. The 12-month strip lagged a bit, advancing only 6.6 cents to average $4.898. At 72,850, volume was down considerably from the fund-heavy trading for the third straight session.

For several market watchers polled by NGI Tuesday, the mid $4.70s was as good as any level for support. A month ago, the October contract exhibited considerable difficulty on each attempt below the $4.75 level, as winter hedging would swoop in to bid up the market. It was that buying interest, coupled with supportive technical factors, that lifted the market Tuesday.

“I’ve begun recommending buying this dip and have aggressively suggested selling puts,” wrote Jay Levine of New Hampshire-based Advest Futures in a note to customers Tuesday. “While this sell-off could extend further, my belief is any sell-off will be limited in price and time.”

He was not alone in this view. Also a champion for using options to take advantage of the anticipated up-move was Ed Kennedy of Commercial Brokerage in Miami. “We are up against long-term support. Lock in winter prices now using call options,” he urged his clients.

On the other hand, Tim Evans of New York-based IFR Pegasus argues that it will take a little bit more than bargain buying to punch through resistance in the $4.98-5.00 area. Instead, Evans sees the market susceptible to at least one more trip down to Monday’s $4.74 low. “[That] may be needed to help confirm more lasting support at that point, with minor new lows beneath that level eroding some of the congestion ahead of the $4.565 low from Oct. 2.”

While Evans may sound like a technician, he remains a market fundamentalist at heart and is therefore bearish due to the high level of gas in storage. Looking ahead to Thursday’s update from the Department of Energy, he calls for a 75-85 Bcf build. If realized, a number of that magnitude would easily eclipse the year-ago and five-year average analogs of 33 Bcf and 51 Bcf respectively. More importantly, an injection of 57 Bcf or greater would put storage levels above the 3,000 Bcf level with at least two more weekly injections still to come.

And the bearish storage news won’t end when the gas starts coming out of the ground, argues Citigroup analyst Kyle Cooper. In fact, Cooper warns that barring another cold winter, total storage draws this winter will lag last winter by 300 Bcf or more, leaving a hefty 1,000 Bcf in the ground next April as the market cycles back to storage injections. This past April, storage dipped as low as 623 Bcf.

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