After an initial push higher failed to break above overhead resistance, natural gas futures tumbled lower Wednesday as traders balanced their positions ahead of the most anticipated storage report in nearly a year, which is set to be released on Thursday at 10:30 a.m. EST. Except for a pause near noon EST, the selling pressure was steady throughout the session, pressing the prompt month down to support near the $6.10 level. February closed at $6.15, down 14.1 cents for the session.

Sources agree that Thursday’s storage report is a pivotal factor in the future direction of the natural gas market. Following the recent string of smaller than expected storage withdrawals, market-watchers are bracing for a whopper of a drawdown to be released. The common range of expectations range from 160-202 Bcf, with outliers suggesting the figure could be as small as 150 Bcf or as large as 250 Bcf. Various newswire reports peg the average expectation in the 185-188 Bcf range.

If those average estimates are correct, the figure would be open to either bullish or bearish interpretation. Last year at this time the market witnessed a 219 Bcf draw and the five-year average for the week is calculated at 165 Bcf. Following last Thursday’s surprisingly small (given the record cold) 153 Bcf withdrawal, the market dumped 54 cents.

And while the market will certainly react to the storage number Thursday, natural gas traders are famous for quickly switching their sights to the next morsel of fundamental data. For bulls, this is good news because even if the storage number fails to impress, there is always the weather. Both the six- to 10-day and the eight- to 14-day outlooks are in bullish agreement in calling for below-normal temperatures across roughly four-fifths of the country through the end of the month. Only the extreme East Coast is expected to see normal temperatures — save Florida, which is forecast to be basking in above-normal temperature readings.

In daily technicals, traders will look for a move either above or below Wednesday’s $6.12-49 trading range. For some, the downside is particularly enticing as it sits just above the $6.04-10 chart gap created by Tuesday’s up move. A break below this chasm could lead to a quick move down to the $5.90 level.

Bullish at current levels, Craig Coberly of GSC Energy in Atlanta admits that a break of support at $5.90 would prompt him to re-evaluate his outlook. “I believe probabilities are very high that [prices] will [hold above $5.90], but if not, the immediate bullish case will be invalidated and more decline or base building will take place before a substantial rally begins.”

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