Settling lower for the fifth consecutive regular session, March natural gas futures on Friday brushed off winter storm concerns for the weekend en route to carving out a new low for the move at $7.250. The prompt month finished the week at $7.316, down 16.3 cents from Thursday but an astounding $1.297 lower than the contract's close in the prior week.

Even as forecasters such as called for a "weekend blizzard to hit the major cities in the Northeast," traders were unable to get over the fact that January was 27% warmer than normal and natural gas storage reached record levels for this time of year after the Energy Information Administration reported that a scant 38 Bcf was removed from underground stores for the week ended Feb. 3.

The 2,368 Bcf in storage as of Feb. 3 sets a new record for storage levels following the first report including February. The only year that comes close to matching this year is 2002, when working gas in storage stood at 2,332 Bcf as of Feb. 1.

"I think we are looking at testing the contract's low down around $6.955, so I would say that is our next target," said Brad Florer, a broker with ICAP Energy. "I just don't see anything coming in and saving this unless something happens in Iran and crude screams higher. Otherwise, I think you'll be fighting to find anybody willing to step in front of this thing and buy this stuff. The question is why would anyone do that right now. There is really no reason. We have historic levels of gas in the ground and it does not look like that is going to change."

While temperatures dropped across the country late in the week and the East braced for a stormy Alberta Clipper, Florer said the downside likely wasn't complete yet.

"Despite this cold front, I think we will likely see more of the same [this] week," he said. "Once we breach $7, I am not sure how much downside momentum will remain. I think at some point we will flatten out and this thing will start moving sideways. While I am not looking for a bounce, I think sometime during the week of Feb. 13-17 we might finally start to see a floor materializing."

The broker also noted that the overly active hurricane seasons of the past two years have people talking about the 2006 season early. "As we move towards the end of the heating season, the focus will move from winter to summer, which means hurricanes," Florer said. "While I realize we are probably two months away from thinking about that, the recent hurricane seasons have traders out there already talking about the 2006 Atlantic hurricane season and what we might see."

Despite expecting the floor to this market being within reach, Florer said he wasn't ready to turn bullish yet. "Overall, I wouldn't be buying natgas here," he said. "That 38 Bcf withdrawal report on Thursday wasn't any help to the people who are long this market."

Other top traders remain bearish as well. "February is shaping up to be a cool month with below-normal expectations generally extended beyond [Feb. 13-17], the late stage of the heating season, and the large supply surplus is a mitigating factor that will continue to restrict price rallies going forward," said Jim Ritterbusch of Ritterbusch and Associates. "We are still suggesting a bearish trading posture in natural gas. Any shorts established in the $9.10 to $9.60 zone basis the March contract should be maintained and protected by stops above $8.65. Downside possibilities still exist to the $6.00-7.00 zone."

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