After bending but not breaking lower at the open, natural gas futures battled back Monday as traders digested updated weather forecasts and storage estimates. The January contract finished at $5.116, down 6.7 cents for the session but up 8.6 cents from its $5.03 low. As expected, estimated volume — at 66,458 — was weak, as many traders elected to remain on the sidelines ahead of the holidays. Nymex energy markets will close at 1 p.m. Tuesday and reopen at 7 p.m. Wednesday with Access trading.

Corroborating bearish 30- and 90-day outlooks released last week, the National Weather Service latest six- to 10-day forecast calls for above-normal temperatures across the northern Plains, the Great Lakes region, the Northeast as well as a large portion of the West for the start of the new year. Only a small swath of the Southeast, comprising South Carolina, Georgia, Alabama and North Florida, is expected to see colder-than-normal mercury readings, the NWS said.

However, any downward momentum that bears initiated Monday was countered by what was going on in the nearby crude oil and natural gas cash market. Buoyed by the expectation of another brief push of cold air into the Northeast and Mid-Atlantic on Christmas Day, physical gas prices withstood the early softness experienced by the gas futures pit. Also of bullish influence Monday was the price action in crude oil futures, which exploded to a new 22-month high on concerns that the Venezuelan strike continues to restrict U.S. supply of oil. February crude advanced $1.45 or nearly 5% to finish at $31.75 Monday.

Looking ahead, traders and market watchers are beginning to bandy about estimates for this week’s storage report, which will be released between 10:30 a.m. and 10:40 a.m. Eastern Time on Friday. Despite degree days heating that suggest it was warmer last week than a year ago, Thomas Driscoll of Lehman Brothers looks for a withdrawal of 90 Bcf to surpass the year-ago drawdown of 80 Bcf. “Our forecast of “weather -normalized” withdrawal rates is in line with typical five-year average seasonal patterns — but we are intrigued that the data from the past four weeks has shown an average withdrawal that has been 3.9 Bcf/d above weather-normalized averages. The rising gas prices of the past few weeks may “crimp” demand,” he wrote in a note to customers Monday.

In daily technicals, Tim Evans of IFR Pegasus has shifted his focus to February, which he sees as having support in the $5.06-10 area. “Failure to hold this floor would prove a disappointment, but we’d look for more buying interest at $5.00, $4.85 and $4.67-70 if the market were to come under a stronger than expected attack,” Evans wrote in a note Monday. On the upside, he sees resistance at $5.20-25. A break higher could mean a retest of recent highs at $5.47.

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