Continuing on its recent pattern of moving slightly higher or lower within its current "congestion range" as weather forecasts change, February natural gas futures on Tuesday traded between $4.338 and $4.490 before closing the regular session at $4.481, up 8.2 cents from Monday's finish.

"The market just seems to want to run back and forth every time there is a little change in the weather," said Steve Blair, a broker with Rafferty Technical Research in New York. "When we get some snow in the Northeast, the market rallies. When some of the blue leaves the short-term weather forecast maps, prices come back down. Futures really don't seem to have much direction."

The broker noted that the market seems to be fairly comfortable within its current "congestion range," with no desire to really shoot higher or lower.

"A lot of people who comment on the market continue to talk about a run-up north of $5, but I'm not too sure about that," he told NGI. "All of these forecasters are talking about this brutal cold we were going to get in the middle of the month. Well, we're almost there, so let's see if the talk is real. It's important to remember, once we get past January the winter is basically halfway over, and we still have an awful lot of gas on hand. If we get through the month without a run of really cold temps, then I believe the market is going to take a totally different tack."

Some analysts suggest that the market is confined to a narrow trading range and unlikely to decline much further.

"This market appears to be evolving into a holding pattern with nearby futures working into a preferred trading range between about the $4.35 and the $4.45 area, [Monday's] approximate trading parameters," said Jim Ritterbusch of Ritterbusch and Associates. "The market has already priced in this week's unusually cold weather patterns and another strong storage pull in next week's EIA [Energy Information Administration] report has been efficiently discounted. This dynamic of shrinkage in the supply surplus is restricting downside price follow-through at the present time. This is why we have excluded the likelihood of a $3 handle as developing within this market anytime soon. As a matter of fact, we expect the $4.25 area to offer solid support should it be tested this week."

If Ritterbusch's assessment of a trading range is correct, a number of market bulls may be in for a disappointment. According to government figures, traders concerned with the directional component of the natural gas market and less inclined to offset the risk of a physical position both entered the long side of the market and exited short positions for the five trading days ended Jan. 4.

The Commodity Futures Trading Commission in its Commitments of Traders Report showed that managed money at IntercontinentalExchange (ICE) increased long natural gas futures and options (2,500 MMBtu per contract) holdings by 79,827 to 381,343 contracts and short positions fell 14,405 to 35,381. At the New York Mercantile Exchange managed money added 5,489 long futures and options (10,000 MMBtu per contract), bringing holdings to 146,588 contracts, and short positions fell by 37,547 to 199,671. Prices responded accordingly. February futures rose 38.1 cents to $4.669 for the five days ended Jan. 4.

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