Feeding off Monday's 18.9-cent decline, January natural gas futures continued to plumb lower price levels on Tuesday. The prompt-month contract reached a low of $4.126 before closing the regular session at $4.180, down 3 cents from Monday's finish.

Even as the National Weather Service's latest six- to 10-day forecast continued to show a large swath of much-below-normal temperatures covering the eastern third of the United States, some market watchers believe that the coming winter cold has already been priced into the market for the most part.

"The natural gas market is seeing some follow-through selling after Monday's drop, with traders simply no longer impressed by the current cycle of below-normal temperatures, and we have to agree that the impact on the benchmark year-on-five-year average storage surplus is bound to be limited as the second week of December was quite cold both last year and on average over the past five years, limiting the dent that can be made in the surplus in the near term," said Tim Evans, an analyst with Citi Futures Perspective in New York.

Evans' early prediction is that the Energy Information Administration will announce a 40 Bcf withdrawal Thursday morning for the week ending Nov. 26. He noted that some of the other estimates are for a 25-30 Bcf pull.

The number revealed Thursday morning at 10:30 a.m. EST will be compared to last year's date-adjusted 2 Bcf injection for the week and the five-year average withdrawal of 37 Bcf.

The analyst said he believes the report for the week ending Dec. 3 "will be the more bullish result."

Some weather forecasters note a change in their models. Matt Rogers, president of Commodity Weather Group, said, "[Monday] there was considerable consternation, based especially on the American operational models, that the colder pattern was flipping much warmer by the 11- to 15-day. Overnight, the American models have retreated from that viewpoint. Nearly all models agree the six- to 10 is colder than the 11-to 15-day for the Midwest, East and South (and our maps are stronger with six- to 10 cooling today due to consistency). But the main blocking influences persist, which argue for more cold chances even in the 11-to 15-day today. There are signs on the models that a Gulf of Alaska low could slowly strengthen (which could warm the second half of December)."

Data from the government shows that traders exited the short side of the natural gas futures market and shifted their emphasis to the long side for the five trading days ended Nov. 23. The Commodity Futures Trading Commission in its Commitments of Traders Report showed that at IntercontinentalExchange long futures and options (2,500 MMBtu per contract) fell 4,602 to 218,392 and short holdings slid by 5,361 to 97,294. At the New York Mercantile Exchange (10,000 MMBtu per contract) long futures and options rose by 11,257 to 141,724 contracts and short positions fell by 10,693 to 187,924. When adjusted for contract size, longs at both exchanges rose by 10,107 and short futures and options dropped by 12,033 contracts.

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