February natural gas futures closed higher in a session described as “book-squaring” with traders focused on spread trading with little in the way of any fundamental developments. At the close February posted an advance of 4.1 cents to $4.736 and March added 5.1 cents to $4.743. March crude oil fell 48 cents to $89.11/bbl.

“It wasn’t much of an action day, but the February-March spread was active as was the February-April. It looked as though once those spreads finished trading the market corrected itself,” with a slight advance at the end of the session, said a New York floor trader.

He added that there was no indication that Thursday’s stout 13.4-cent advance posted by the February contract prompted any kind of short-covering or further buying. “The market is feeling better now. I was looking for a breakdown under the $4.40 area, but the market doesn’t seem to want to do that, and if the market can trade up to $4.83, I think it will make it up to $5.”

Other traders focused on more fundamental relationships point out that some of the spreads are wide enough to create interest in storage plays. “April-January is wide enough [61.8 cents] where it is likely to attract buying interest [buying April and selling December],” noted Tom Saal, vice president at Hencorp Futures in Miami. According to Saal’s calculations, traders such as storage operators might express interest in buying contracts such as April, taking delivery, and in turn selling January futures to capture some portion of storage costs. “That’s a pretty good number. It’s not super wide, but it is attractive,” he said.

In early trading forecasters seemed pleased with the agreement among overnight weather model runs. MDA EarthSat in its six- to 10-day outlook calls for below-normal temperatures south and east of a sinuous line from Maine to northern Illinois to South Dakota to central Texas. The western U.S. is generally expected to be above normal. “This period has progressed forward mostly as expected since [Thursday]. A brief relaxation of the cold is expected across the Northeast at the onset of this time frame due to a nearby storm system,” the forecaster said in a Friday morning note to clients.

“Temperatures should return to colder over the region thereafter, though a quick repeat of the extreme cold appears unlikely,” the forecaster said. “Some variability is expected to impact the Upper Midwest during the early to mid period before another colder air mass arrives late. The most persistent warmth is expected along the West Coast. Models are in better agreement on the pattern evolution today.”

Top traders recommend staying flat. “We are suggesting a shift back to a sidelines or neutral trading posture after advising short positions into the March futures within the $4.60-4.70 zone in yesterday’s trade,” said Jim Ritterbusch of Ritterbusch and Associates. “The overnight trade is currently up only marginally, [but] we expect a strong finish to this week as we defer an assertive bearish approach to this market until some temperature moderation is forthcoming. We will be viewing a possible close above the $4.80 [area] in February futures ahead of next Thursday’s expiration as a significant technical bullish development that could force a shift to a bullish short-term stance. But we will reiterate that updates to the temperature views early next week will prove critical to the short-term price direction.”

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