In what was one of the quietest sessions in recent memory, the natural gas futures market chopped mostly sideways Tuesday as neither bull nor bear was able to influence a move in their favor. The March contract closed at $6.316, down a half cent for the session and near the middle of its $6.26-40 trading range on the day.

The lack of price movement gave traders and market-watchers a rare breather in this highly volatile marketplace. Although the fundamentals remain bearish, not all observers are calling for lower prices. “One of my technical indicators says it could go down to $5.70,” noted Tom Saal of Commercial Brokerage in Miami. “We could go lower to touch the Bollinger Band at $5.71. Otherwise, we are running out of bearish indicators.”

Saal said that while the market has been in a downtrend since October, the momentum is beginning to wane. “We broke above the downtrend line — on a daily basis — Monday. A settlement Friday above $6.35 would do the same on the weekly chart and confirm the break.”

But while the technicals are beginning to point up, the fundamentals continue to suggest lower prices are ahead. According to the latest six- to 10-day forecast released Tuesday by the National Weather Service, above normal temperatures are predicted for the entire eastern half of the United States — except Florida, which will be warm regardless — for the Feb. 7-11 period.

It is that weather forecast that will take the legs out from under any potential running of the bulls this Thursday when the latest EIA storage data is released, according to Tim Evans of IFR Pegasus in New York. “While a declining [storage] surplus is normally supportive for prices over the intermediate-term, we expect a similar reaction to last week, when a short-lived rally gave way to selling as the focus shifted to warmer temperatures ahead.

“In our view the market should have trouble sustaining a rally because it remains overvalued on a longer-term basis, having spiked on production lost due to Hurricane Ivan, even though the losses only managed to moderate a bearish storage trend,” he said. Evans expects Thursday’s storage report to feature a sizable 210-230 Bcf draw. He targets key short-term support at $6.11.

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