Bouncing back a little from last week’s declines, January natural gas futures followed crude higher Monday, hitting a high of $6.94 before settling at $6.923, up 12.7 cents on the session.

The up day in natural gas was helped partially by the crude complex, which saw January futures hit a $43.60 high following an attack at the U.S. consulate in Saudi Arabia. The contract finally settled at $42.98, good for a 44-cent gain on the day.

“The natural gas market is trying to organize an upward correction to last week’s drop with some fundamental assistance in the former of a somewhat supportive temperature outlook for next week, but this is still a market being dragged down by the weight of its elevated storage levels,” said IFR Energy Services’ Tim Evans.

Despite the up day, Evans said it would “take widespread, intense cold” to turn the fundamentals from negative to positive. “Even then, at first it may only make the market less bearish, not actually bullish from current levels,” he added.

According to the National Weather Service’s (NWS) latest six-to-10 day forecast, below normal temperatures are expected to invade the entire East on Dec. 11, while the Midwest and Western states will likely see above normal temperatures. However, looking out a little further to the eight-to-14 day forecast, the NWS is calling for below normal temperatures only in the Southeast, with normal temperatures expected in the Northeast and above normal temperatures taking place in a majority of the remaining sections of the country, including the entire West.

Looking to the upside first, Evans noted that interim resistance might be at the $7.05 level, which is the Sunday overnight high that January natural gas hit, then retreated from. “We see some further, nearby opposition to $7.18 or so before the market earns the right to investigate the failed support at $7.455, or to fantasize about the $8.30 downtrend resistance or the $8.70 peak from the November 24 spike,” he said.

Looking lower, Evans said January’s $6.69 low from Thursday and Friday remains the benchmark floor, although he noted that this level is closely backed by the earlier $6.66 spot low for November and the $6.505 spot low of October 13.

“Failure to hold these levels leaves January with just its $6.30 bottom from September 16 to prevent an even more substantial drop, which we think could bring projected buying at $5.10 or the $4.52 spot low from September into play,” he said. “Prices are holding along their declining channel line as possible support, but the lack of a more substantial upward correction off that support suggests it is no reliable limit on how far prices might fall.”

Checking in on the current supply situation, Gulf of Mexico shut-ins related to Hurricane Ivan damage appear to be coming down even more. The Minerals Management Service said that 17 companies reported Monday that 599.25 MMcf/d is still offline in the Gulf, which is equivalent to 4.87% of the 12.3 Bcf/d production of gas in the Gulf. This figure is down from the Dec. 2 MMS report, which listed 17 companies reporting 635.77 MMcf/d, or 5.17% of the Gulf’s daily production shut in. Neither MMS report included production lost due to destroyed platforms.

Since the hurricane in early September, 134.129 Bcf of natural gas has been cumulatively shut in, accounting for 3.014% of the 4.45 Tcf in yearly production of gas in the Gulf.

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