Once again marching in lockstep with crude futures, February natural gas pushed higher on Friday. After trading between $9.060 and $9.440, the prompt month ended up settling at $9.280, up 37.5 cents on the day and 48.9 cents higher than the previous Friday’s close.

The week of trading also saw a new near-term low carved out. Since the warm weather trend hit in late December, February natural gas has plummeted from a high of $15.780 on Dec. 13, 2005 to an intraday low of $8.460 on Jan. 19, marking a $7.320 swing in just over a month. Last Wednesday’s $8.694 settle marked a five-month low for a prompt-month close.

Despite finishing the week on a two-day upswing, traders were looking for a more impressive move higher before they were ready to call out a bottom. “I am not prepared to call $8.460 a bottom because we have yet to see a significant bounce,” said Brad Florer, a broker with ICAP Energy. “I’m not sure we have actually seen the lows, just like I don’t think we have seen buyers come in all fired-up to try and take advantage and make a $3 move to the upside. I think we are in an oversold market that has had no real bounce in over a month. It is well overdue for some significant short-covering to come in.”

A large jump in February crude futures Friday seemed to spur natural gas. Prompt-month crude settled on Friday at $68.35/bbl, up $1.52 from Thursday’s settle.

“The whole thing is primarily based on crude futures,” Florer said. “The rally crude has been having has forced natural gas to come off its lows. I think if there is any weakness this week in crude, natural gas will come off immediately.”

The broker added that continued mild weather offers no support. “Even though some forecasters are calling for a colder February, there is still nothing on the horizon that you can actually see and point to,” Florer said. “Eleven days out is still expected to be quite warm.”

A New York floor trader said weather remains key to any swing to the upside. “We believe that $8.50 is solid technical support and that the risk-reward of purchases of near-term futures at those levels should be effective.” He added that weather conditions could change and any cold spell could cause the market to “rally $1.00-2.00.”

Others echo the idea that winter is far from over and cold weather could cause prices to rise sharply. “Prices have retreated unusually fast and there are still two months left for the thermometer to drop,” said Michael Fitzpatrick, vice president of Fimat USA in New York.

Near-term weather forecasts, however, do not appear to be all that supportive of higher prices. According to AccuWeather, temperatures in Chicago are expected to reach 40 by Wednesday before subsiding to 36 by Friday. The average high for this time of year in Chicago is 30. In New York midweek temperatures are forecast to reach 42 and increase to 43 by Friday. The seasonal high in New York at this time of year is 37, the forecaster said.

And longer term the National Oceanic and Atmospheric Administration (NOAA) February temperature outlook, released on Thursday, showed above-normal temperatures continuing over the Northeast, Mid-Atlantic, Great Lakes, northern portions of the Southeast and much of the Southwest and California. The only chances of below-normal temperatures were concentrated over parts of the northern Rockies and Pacific Northwest.

“It doesn’t look like we have any arctic air on the horizon,” said Mike Halpert, head of forecast operations at NOAA’s Climate Prediction Center, in an interview with NGI on Thursday. “We do have a weak La Nina in the Pacific Ocean and that does favor some cold developing at least in the Northern Plains, but we really haven’t seen that pattern set up yet. We’re pretty confident that over the next two weeks we aren’t going to see any of that arctic air. In February, the pattern could certainly change.”

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