In a sharp reversal, physical natural gas for Thursday delivery fell hard and fell often in Wednesday trading. One point followed by NGI was unchanged, and most points outside the Northeast fell about a dime.

Multi-dollar declines in New England tugged at the overall figures, and the NGI National Spot Gas Average lost 18 cents to $2.88. Futures had its own set of problems, not the least of which was at least a near-term technical failure off recent highs.

At the close, April had fallen 8.2 cents to $3.011, and May was down 8.2 cents to $3.073. May crude oil shed 20 cents to $48.04/bbl.

Futures traders don't see the market able to hold $3.

"Not in my opinion," said Harry’s RE Trust principal Alan Harry in New York. "I think $3.12 was the high for natural gas short-term, but one thing that could change is the [storage] number that comes out Thursday. I think the market has it higher than the expected average, and if it comes in at the expected average, down we go.

"I think we can get down to $2.87 to $2.80. If it does come in as a surprise to the upside, which I strongly doubt, then we might see the highs again of $3.10 to $3.12, but I think we are going down."

Estimates for Thursday's Energy Information Administration storage report for the week ending March 17 show a wide range. A Reuters survey of 26 traders and analysts revealed an average 150 Bcf draw with a range of -127 Bcf to -170 Bcf. Analysts at Wells Fargo Securities are looking for a pull of 156 Bcf, and Raymond James & Associates Inc. calculated a decline of 138 Bcf.

The number revealed Thursday morning will be compared to last year’s 13 Bcf addition for the week and the five-year average for the date of a 21 Bcf withdrawal.

"A very large option buyer came into the market and bought May $4 calls, but I think we would have to have several big draws come out that we didn't expect, but in the short term, the April expiration, we are going lower,” Harry said. “I think $2.80 holds and from there we are headed back up, and from there we could see $3.25 to $3.40.”

In early trading, April opened 4 cents lower Wednesday morning at $3.05 as traders saw little near-term change in ongoing weather forecasts capable of lifting prices and the technical picture momentarily stalling.

Weather forecasts Tuesday overnight changed only modestly, with much above normal temperatures extending from East Texas to the Ohio Valley during the six- to 10-day period.

"Most of the change in this period comes from the Mid-Atlantic to the Northeast, with the early parts of the period being warmer under a less aggressive push of high pressure into areas east of the Appalachians," said MDA Weather Services in a Wednesday morning report to clients.

"While the Mid-Atlantic is expected to hold on the warm side of normal for most of the period, a nearby cooler air mass has the forecast scaling back the warmer anomalies into the Northeast from mid to late period. Changes were small most elsewhere, with much aboves remaining favored in the southern Midwest and across the South. The West features generally near normal readings overall."

Evidently, Tuesday's advance through the previous high wasn't enough to satisfy market technicians working the bullish case.

"On one hand, I am not surprised to see a pause after Monday's sharp rally," said United ICAP market technician Brian LaRose. "On the other hand, I am a little concerned that the bulls were unable to push through the previous high at $3.089.

"To keep the case alive for a run to $3.232-3.258 or even $3.432-3.449, bulls need to generate a rally Wednesday. I would be prepared for another dip to the $2.880 vicinity if the bulls cannot follow through."

FCStone Latin America’s Tom Saal, vice president, in his work with Market Profile expected the market to test Tuesday's value area at $3.097 to $3.063. Saal pegged the initial balance for the week at $3.113 to $2.958. Should April futures break out of that range, he looks for trading objectives higher at $3.191 and lower at $2.881.

In physical trading, a robust temperature rise in the gas-intensive Midwest gave traders little incentive to purchase incremental supplies. forecast that the high of 35 degrees on Wednesday in Chicago would jump to 50 on Thursday and 72 on Friday, light years ahead of the normal seasonal high of 49. New York City's high of 50 Wednesday was expected to slip to 44 Thursday and bounce back to 50 on Friday, 2 degrees below normal. The 82 max in Dallas on Wednesday was predicted to hold Thursday before easing to 76 Friday, 11 degrees above normal.

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Gas at the Chicago Citygate dropped a dime to $2.89, and packages at the Henry Hub fell 8 cents to $2.98. Gas at the NGPL Midcontinent Pool was quoted 7 cents lower at $2.66, and gas on Kern Receipt shed 8 cents to $2.61. Deliveries to SoCal Citygate changed hands 2 cents lower at $3.07.

Eastern points endured sharp losses. Gas at the Algonquin Citygate fell $2.86 to $4.01, and gas on Iroquois Waddington was quoted 37 cents lower at $3.46. Gas on Tenn Zone 6 200L tumbled $2.71 to $4.10.

Parcels on Texas Eastern M-3, Delivery came in 28 cents lower at $2.89, and gas on its way to New York City on Transco Zone 6 fell 25 cents to $3.11.