Like a rubber band stretched to its snapping point, the natural gas futures market was unable to extend any further to the downside Monday as both bull and bear traders were reluctant to make a move ahead of the December expiry Tuesday. Modest buying was seen at the closing bell, gently nudging the prompt month 4.8 cents higher to its penultimate day settlement of $4.682.

Traders came into the office this week to find the natural gas futures market in much of the same predicament as it ended the week: bearish storage and weather and bullish technical factors. In fact, the only discernable difference between this week and last was the direction of crude oil prices. After soaring to nearly $33/barrel last week, January crude dropped like a rock Monday to notch its first sub-$30 close in more than two weeks.

Natural gas futures chose not to follow its hydrocarbon brethren lower Monday, further increasing the tension on the rubber band of market sentiment. While bears see the band snapping and depositing prices dramatically lower, bulls sense a mighty rebound is in the offing.

“We remain fundamentally bearish, but believe a rather dynamic short covering rally may occur in the near term,” offered Kyle Cooper of Citigroup. A short crude and long natural gas position as mentioned [Monday] morning, would indeed have been a very good thing. We do believe that position still has merit,” he wrote in a note to customers last night.

Though Cooper is quick to couch that sentiment by saying that he would only become bullish in the longer-term following a shift in the underlying fundamentals, his comments are conspicuous in that he has been a dyed-in-the-wool bear for several months now.

Gently leaning to the other side of the fence is GSC Energy analyst Craig Coberly, who warned his customers just how thin the margin of error is in his bullish prediction. “The demonstrated strength provided by [Gann support at $4.85-86 basis January] also warns of the substantial bearish consequences if it should fail. A break of this support line would likely trigger a rather quick decline to about $4.30.”

The EIA said it intends to release its next weekly storage survey on Wednesday between noon and 12:10 p.m. EST because of the Thanksgiving holiday. Early expectations are centered on anything from a single-digit withdrawal up to as much as a 30 Bcf net build. Last year at this time the market experienced a 49 Bcf withdrawal and the five-year average is a 40 Bcf takeaway.

Tim Evans of IFR Pegasus in New York comes in on the bearish side of the storage prediction scale with a 25-30 Bcf refill estimate. “We still think the 32 Bcf draw [released] last week will only represent an exception to the ongoing bearish storage trend,” he said.

Technically speaking, Evans would need to see a move by January futures above $5.00 in order for him to be excited about this market’s prospects.

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