Physical natural gas prices advanced nationally by about a nickel Tuesday as traders cited a resilient prior-day futures screen and favorable storage differentials. Points across the country were up mostly by a dime or less, except for some eastern locations, which recorded moderate declines. Nuclear outages continued to remain high. At the close of futures trading April had eased 1.6 cents to $2.335 and May had given up 3.4 cents to $2.432. April crude oil tumbled $2.48 to $105.61/bbl.

A Midwest trader cited ongoing storage plays as lending support to the cash market. “There is no demand and what do you do with the gas? You have to put it into storage. Sell the Nymex and buy physical.”

A number of Midcontinent points fit that equation nicely. January futures settled at $3.475 and NGPL Midcontinent was quoted up a nickel at just over $2, leaving a hefty margin once stored physical gas is sold in January. Other points firmed as well. ANR SW rose just shy of a nickel and Oklahoma Gas Transmission jumped by a few cents more. Deliveries on Panhandle Eastern advanced nearly a nickel as well.

“There is always storage available, and this is the most that will be available and storage is likely to fill prematurely,” the trader said.

California points were higher also. Deliveries to SoCal Citygate were up just over a nickel and SoCal border jumped a dime.

Nuclear outages continue at high levels. According to the NGI‘s NRC Power Reactor Status Report, a record amount of nuclear capacity is off line. The report showed 20,263 MW was unavailable because of nuclear reactors either being down or not operating at full capacity. This represented a total of 31 facilities out of a total U.S. capacity of 100,900 MW generated from 104 facilities. The maximum amount of nuclear power offline at this date was 17,512 MW and 15,939 MW was offline in 2010 and 16,811 MW in 2011.

Quotes on northeast pipelines were mixed. “There’s a lot of gas being pulled over to Canada, and that is driving prices up on Iroquois Waddington,” an eastern marketer said. “It’s warmer up there than it is in Houston.”

Although Iroquois Waddington was up by nearly a dime, deliveries to Algonquin Citygate and Dracut both eased by a few pennies. Tennessee Gas Pipeline Zone 6 200 L also shaved a few cents off for Wednesday delivery.

Futures trading was quiet as the normally rambunctious spot April contract was held to a range of only 5 cents. “Traders are getting frustrated at the lack of movement, but I think there is a contingent that wants the [futures] market to stay above $2,” said a New York floor trader. “They don’t want it free-falling. A line has been drawn and they don’t want it reaching the $1.80 area.”

The trader cited support at “the mid $2.20s to low $2.30s, and traders are buying the front months and selling the backs. That is suppressing the back months, but that doesn’t take away from the obvious that the front month is just weak.”

Natural gas traders may want to keep one eye on the crude market also. “We still feel that the large speculators still possess ammo to employ toward the short side of this market, especially if the oil complex comes under renewed downside pressures,” said Jim Ritterbusch of Ritterbusch and Associates. “While a show of support during the past couple of weeks has improved the technical picture to some degree, fundamental balances remain heavily skewed in a bearish direction. We don’t expect any quick fix to the bearish balances given this early entry into the shoulder period amidst a record supply overhang.”

Market technicians see the bullish case at an important juncture. It’s time to put up or risk further price erosion. “For the bulls to have any hope they must produce a decisive close above the $2.420 level this week. The more time that passes with natgas just sitting down here, the more the pattern will resemble a bear market rest stop in a continuing down trend,” said Walter Zimmermann, vice president at United-ICAP.

Zimmerman did concede that “there is bullish RSI [relative strength indicator] divergence on the weekly charts from a very oversold state. In the past this condition has sparked a short-covering rally. However, in the past storage was never this full.”

WSI Corp. of Andover, MA, says there is little change in its 11- to 15-day outlook. “With the exception of the West Coast, above-, much above-, and super-above-normal temperatures are forecast over most of the country.”

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