Futures were mixed in light pre-inventory report trading Wednesday. Short-term traders noted little in the way of directional trading and cited forecasts of warmer eastern weather expected to take some of the edge off any weather-driven advances. At the close February futures fell one-tenth of a penny to $4.287 and March added 1.1 cents to $4.298. February crude oil fell 37 cents to $91.12/bbl.

Traders reported a lackadaisical pace to the day's trading. "It [February] traded at $4.27 for about 45 minutes and then moved up to $4.28, but the main thing going on today was that traders were buying the February-March spread [buying the March contract and simultaneously selling the February]," said John Woods, senior trader at McNamara Options in New York.

Woods added that there was a wide range of estimates of Thursday's inventory report. "We are hearing as low as 120 Bcf and as high as 160, but we are sticking with 135. The last couple of reports have been good selling opportunities, and if prices rally, traders will smack it. It's going to be 50 degrees in New York City on Saturday, but the computer traders will have their programs ready, and somebody is going to get burned."

Last year at this time 130 Bcf was withdrawn from inventories, and the five-year average draw stands at 118 Bcf. Industry consultant Bentek Energy, utilizing its North American flow model, is looking for a reduction of 133 Bcf, and Houston-based IAF Advisors expects 140 Bcf to be pulled. First Enercast calculates a withdrawal of 144 Bcf. The report will be released by the Energy Information Administration at 10:30 a.m. EST.

February futures moved little despite a change in weather forecasts. Commodity Weather Group (CWG) in its morning report shows below- to much-below-normal temperatures in the 11- to 15-day period west of a broad arc stretching from North Dakota to New Mexico.

"Today's confidence boost comes as the European and American ensembles now agree to return Alaskan ridging while maintaining an impressive North Atlantic-to-Davis Strait blocking pattern," said Matt Rogers, president of the firm. "This means that cold air transport would begin anew into much of the U.S. The bigger question today is, 'How Fast?' The American ensembles are in a big hurry by sweeping cold conditions across the U.S. by Jan. 8. The European ensembles are slower to return the Alaskan ridge so that they finally cool down much of the U.S. by around Jan. 11-12. We favor the cautious, slower timing today with milder East yet on Jan. 8-10." In both the six- to 10-day and 11- to 15-day CWG outlooks, however, the Midwest and East are shown to be in a normal to above-normal temperature pattern.

The National Weather Service in its eight- to 14-day outlook shows almost the entire Lower 48 with below-normal temperatures. Only New England, portions of the Pacific Northwest and southernmost Texas are shown as normal.

Today's February settlement places the market at a critical technical point according to analysts versed in the mechanics of Elliott Wave and retracement analysis. They see $4.286 as a critical threshold for both bulls and bears. "So far the move up from $3.951 counts like a text book perfect [corrective] ABC pattern," said Brian LaRose of United Energy. "And with the February contract rolling in as spot two ticks above our A=C target, we highly recommend a defensive stance. Break decisively above $4.286 and $4.490 will be the next hurdle for the bulls. Turn lower from $4.286 instead and $4.057 will be the first challenge for the bears."

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