Coming off of Tuesday’s 13.1-cent climb, April natural gas futures got back to the downward trend Wednesday as it plumbed new lows for the move. After carving out a new low at $6.450 in morning trade, the prompt month rebounded in the afternoon to settle at $6.648, down 3 cents on the day.

As any threat of a late winter burst of cold air diminishes by the day, traders — faced with a record storage surplus — continue to struggle to find anything bullish to talk about. Even crude futures, which is sometimes seen as a influential factor in the natural gas arena, have been dropping in recent days. April crude shed $1.56 on Wednesday to close at $60.02/bbl.

The overall weakness has led some market experts wondering how low natgas futures can go. “While I don’t think $4 gas is around the bend, $5.82 could be in the works,” said Brad Florer, a broker with ICAP Energy. “That represents about half of the way back from the April contract’s high of $11.65 on Dec. 13, 2005.”

Florer said lower appears to still be the direction due to the lack of anything for bulls to get a foothold on. “I really fail to see what is going to drive this thing higher,” he said. “While the bears have lost some of their momentum, there really is no motivation on the bulls’ side right now. I would be surprised to see a significant rally from here unless something funky happens.”

Florer said he thinks this mostly sideways movement of the past week and a half will continue, with some gravitational pull to the downside. “I think [the cash market] is also going to get weaker and weaker. I really don’t see the downtrend changing unless crude explodes again for some reason,” he said. “With the amount of gas in storage right now, a significant crude rally might be the only thing that can pull gas up.”

The broker said the market has to remember historical comparisons with price and storage. “There is just too much gas right now,” Florer said. “Prices are cheap if you want to compare them to $15, but if you want to compare the current price level to historical averages, we are still obviously on the high end of things here.”

Analysts suggest that continued weakness in the cash market is tugging futures lower. “The cash market usually trades at a significant premium to April futures this early during the month of March,” noted Jim Ritterbusch of Ritterbusch and Associates. He added that the “weak spot trading environment will be exerting downside pull on the front of the curve amidst increasing talk of potential forced physical sales due to excess supplies and a need to meet commitments.”

The NGI Daily Gas Price Index showed that gas for delivery March 9 at the Henry Hub finished at $6.48, down 5 cents, whereas April futures settled at $6.648.

Near-term temperatures in major energy markets are expected to be above seasonal norms. AccuWeather.com reports that the high of 48 degrees Wednesday in Chicago is expected to rise to 58 by Saturday before sliding to 44 by next Wednesday. The normal high for this time of year is 44. New York City’s Wednesday high of 48 is forecast to rise to 59 by Saturday before easing to 49 by next Wednesday. The normal high for New York City at this time of year is 47, the forecaster said.

Prices can be expected to work lower, according to Ritterbusch. “We see no reason to adjust a bearish trading posture despite the fact that values have been more than halved during the past two-and-a-half months. We are maintaining a short-term target of $6.40 and a longer-term objective of $6.00 and suggest holding any existing shorts.” Should the $6.00 target be reached, however, it may be time to study the long side of the market.

“We may begin to establish bull spreading strategies on an approach to the $6.00 mark should opportunities develop during the next couple of weeks,” he said.

Looking at the bloated storage situation, ICAP’s Florer said he doesn’t think the industry has another 171 Bcf withdrawal for the week ended March 3. “I think that was a one-time thing,” he said, referring to the sizeable withdrawal recorded the previous week. “I am looking for a withdrawal in the area of 100 Bcf.”

According to a Reuters survey of 23 industry players, storage levels are expected to fall by approximately 110 Bcf when the Energy Information Administration (EIA) releases its report Thursday morning at 10:30 a.m. EST. Coming in a little lower with its projection, Golden, CO-based Bentek Energy expects a storage withdrawal of 91 Bcf, resulting in 1,881 Bcf of gas in storage. “This level is 53.8% above the five-year average and 4.9% above the five-year high,” the company said.

Wednesday afternoon’s ICAP-Nymex storage options auction, which allows traders to hedge against or bet on the storage number, zeroed in on a 94.3 Bcf withdrawal for the week.

The number revealed Thursday morning will also be compared to last year’s 134 Bcf pull and the five-year average withdrawal of 108 Bcf.

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