Answering the question of whether it would break higher or lower from its recent $6.55 to $6.84 range, April natural gas futures on Tuesday broke above to notch a morning high of $6.94. After peaking early in the session, the prompt month settled down somewhat in the afternoon. April ended up settling at $6.847, up 13.3 cents on the day.

Strength in crude and heating oil futures was credited with helping natural gas out of its rut. April crude settled 70 cents higher at $54.59/bbl, while April heating oil climbed 3.88 cents to close at $1.5238/gallon.

Despite the fact that a new cold weather pattern continued to drop cold temperatures and precipitation on the East, a number of market watchers believed that the weather equation had already been factored into the natural gas futures market.

“I think all energies are headline-grabbing Tuesday, led by the strength in crude. The strength in the morning came in part because all of the energies were rallying,” said a Washington, DC-based broker. “We did get through that $6.84, which is the upper end of that resistance level and I think at that point you probably had covering from some of the funds of their short positions.”

Regarding the weather, the broker said he believes that cash prices were obviously going to be more affected in the short term if the current cold blast ends up coming through with wind chills in the single digits in major East Coast population areas.

“I tend to think it had already been played [into the futures market] and that was just part of the general push that got us back up into the general $6.84 range,” he said. “Now that we have broken through, I think it has become a bullish breakout. We appear to be settling a little bit here, but clearly that $6.84 level was being watched by a lot of people and I imagine some shorts were covered at that position and maybe some fresh longs came in as well.

“I really don’t see natural gas collapsing back here a whole lot,” he said, noting that petroleum appears as if it will remain supportive. “The petroleum inventory numbers are coming out Wednesday and there is the expectation that there will be a slight build in crude, but draws in products.”

For the Energy Information Administration’s Thursday morning natural gas storage report, the broker said he is looking for a 131-141 Bcf withdrawal, which would be much larger than last year’s 51 Bcf pull and the five-year average draw of 83 Bcf.

“Even if the storage report revealed a much smaller withdrawal number, I don’t think we will get any bearish price action because the overall storage situation is fine,” he said. “I tend to think it is much more likely that natural gas futures will have upside to $7, rather than any sort of meaningful pullback.”

Advest Inc.’s Jay Levine said he believes that natural gas is playing some catch-up. “I’d be cautious here because while few are interested in buying here (many end-users chiefly among them), there’s a saying that the market (usually pertaining to stocks) likes to climb a ‘wall of worry,'” he said. “We’ve got plenty of that to go around and, as if that wasn’t enough, more and more specs playing the long side thereby adding more and more confusion to an already confused landscape. The fundamentals as we now know them may not justify current prices — and few are arguing that they do — but as I am constantly and consistently stating here, fundamentals are merely a sometime thing.”

Levine said going forward, he’d be open to major price swings, including sharp reversals. He added that he sees support at $6.575, $6.375 and then at $6.175. For resistance, Levine pegged $7.15, $7.45 and then $7.80.

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