The tale of two markets Tuesday reversed itself from Monday, with physical natural gas taking some hard punches and futures holding steady at least for the moment.

California points led the physical market lower with double-digit losses and the NGI National Daily Spot Gas Average fell 9 cents to $1.88. Midcontinent, Midwest and Gulf Coast points fell by about a nickel on average. Futures probed $2, with January trading as low as $2.01 and at the close January had settled at $2.070, up three-tenths of a cent and February was down by five-tenths of a cent to $2.127. January crude oil continued to falter losing 14 cents to $37.51/bbl.

With no hint of market-moving cold weather on the horizon until at least late December, traders are taking a look at the technical picture to determine when the ordeal of ever-eroding natural gas prices might finally abate if not change for the better.

“Bear markets are not a popularity contest so they don’t end when they cease to become amusing,” Walter Zimmermann, vice president at United ICAP told NGI.

“They also don’t end when the losers outnumber the winners, and they don’t end when the point of maximum assumed pain is reached. They end when chart patterns are completed to the downside, and that always seems to exceed by decisive margins rational expectations of what is possible on the downside.

“That is what crude oil is going through right now, and gasoil, and diesel, and natural gas through guilt by association. I think natural gas left to its own devices would just be sitting here not doing much of anything.”

One technical candidate for a long term bottom is $1.90 with $1.902 representing the low posted April 2012. “Natural gas has a long history of double bottoms. Every single low in the history of natural gas futures except one has been a double bottom against the prior major low. That’s definitely something to keep an eye on.”

In the very near term, Zimmermann does see a bullish glimpse. “If $2.085 can be bettered, there is room for a little bounce. I would look for $2.195, but I’m skeptical of the market to do anything more than $2.195 before keeling over again.

“On a decisive close below $2.024, in my book, that opens up a move to $1.90 to $1.70. From $1.43 to $1.90 you start running into some candidates for serious long-term support.”

It’s hard to imagine the weather outlook into December being as mild as it is, but overnight model runs reaffirmed the trend to milder conditions, principally in the population centers of the Midwest and East. WSI Corp in its Tuesday morning report said GWHDDs in the six- to 10-day period decreased and in the 11- to 15-day period GWHDDs rose somewhat but are still way above normal.

“The 11-15 day forecast features more above-average temperatures over the majority of the central and eastern U.S.; below-average temperatures are expected across the West. [Tuesday’s] forecast is a bit cooler over the East and warmer over the central U.S. GWHDDs are up 1.5 for days 11-14 and is forecast to be 124.4 for the period. This is still 26 HDDs below average,” the forecaster said.

“Forecast confidence is only average at best today. Medium-range models show common themes but differ with the details and amplitude of the pattern. Given the warm forecast, there aren’t many upside risks. The Rockies and Plains have the greatest upside risk. The East and West Coasts have risks to the cooler side.”

In the six- to 10-day time frame the forecaster said, “Today’s forecast is generally a little warmer than yesterday’s forecast. Period GWHDDs are down 1.8 and are forecast to be 107.6 for the CONUS.”

Given the severity of Monday’s January futures decline, traders aren’t willing to push the short side further. “This market continues to be pressured lower by an extension of mild temperature views across the eastern half of the nation out toward the Christmas holiday season in some cases,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients.

“This implies some downsized storage draws going forward that will be increasing worries over excess supply come next spring. As far as this week’s storage report is concerned, we won’t be expecting a withdrawal far removed from average levels. However, assuming no significant shifts in the weather views, this market would need a bullish shocker, such as a figure similar to last week’s 53 Bcf draw, even to piece together a return to [Monday’s] high.

“Our previously stated downside price parameter of $2.05 was almost achieved today, and we will look for a solid test or violation in tomorrow’s trade. As is the case in the oil, the fundamental environment remains too negative to support any attempts to pick a bottom. But at the same time, we will caution against fresh entry into the short side given the proximity of our downside target.”

In the physical market, near-term temperature forecasts across the population centers of the East and Midwest kept a lid on any price advances. AccuWeather.com predicted Tuesday’s high in New York City of 50 degrees would climb to 51 Wednesday and reach an almost tropical 57 by Thursday, 12 degrees above normal. Chicago’s 48 high on Tuesday was seen advancing to 51 by Wednesday and 56 on Thursday, a tall 19 degrees above the seasonal norm.

The current December tally of heating degree days for the Windy City is 187 with the month about a quarter gone. The normal sum of heating degree days for Chicago is 1,115, according to AccuWeather.com.

Gas on Alliance and other Midwest market points shed a nickel in Tuesday’s trading. Alliance and the Chicago Citygate fell to $2.00 along with Joliet. Consumers and Michigan Consolidated were down a nickel as well to $2.02 and $2.03, respectively.

Soft power demand and pricing on the West Coast led to some steep price declines for Wednesday deliveries. Intercontinental Exchange reported on-peak power at NP-15 Wednesday fell $1.44 to $30.14/MWh and deliveries to SP-15 shed $1.18 to $27.74/MWh.

Gas at Malin was quoted at $2.01, down 16 cents and deliveries to PG&E Citygate dropped 8 cents to $2.51. Gas at the SoCal Citygate changed hands at $2.22, down 19 cents, and SoCal Border Avg. was seen at $2.01, down 21 cents. Gas on El Paso S. Mainline/N. Baja came in 20 cents lower at $2.03.

The California Independent System Operator forecast peak load Tuesday of 31,060 MW would ease to 30,611 MW Wednesday.