For the second straight session, natural gas futures gapped lower at the opening bell. But in contrast to Monday’s session-long price retreat, the market rebounded Tuesday, pumping life into bulls who are suffering through some mild winter temperatures. The January contract finished at $6.143, down 18.1 cents for the session, but more than 20 cents above its low for the day.

Pressured by short-term weather outlooks calling for well-above-freezing temperatures in the Northeast, cash market prices fell hard Tuesday. The price erosion was most pronounced for New York area deliveries, which tumbled 80 cents or more to drop below the $6.00 mark for the first time this month. The futures market, which opens its regular outcry session a couple of hours after cash market trading has commenced, responded by shedding a cool 30 cents on its first trade of the day.

In addition to the outright selling of the prompt month Tuesday, January futures was pressured lower by traders rolling their long positions to the February contract. This sort of trading activity has had an impact on the relative price of the two months, with January dropping to nearly a dime discount to February after trading at par just a week ago. The February contract slid 15.3 cents to close at $6.235 Tuesday and the March contract dropped 9.8 cents to finish at $5.935. Impressive in their resiliency to the softness was the summer strip, which actually gained a half cent to average $5.007.

While a majority of sources polled by NGI sense the market has not seen the last of higher prices, there is little consensus on the timing of the rebound. Tom Saal and Ed Kennedy of Commercial Brokerage Corp. in Miami see a “buy zone” for the January contract in the $5.85-$6.25 area, and encourage their end-use buyers to take advantage of these levels to lock in a portion of their Jan-Feb load.

On the technical side of the market, Craig Coberly sees Tuesday’s early price valley as a potential low. “Gas didn’t waste any time declining to the lower calculated Gann line support at $6.00 (basis February). This vertical decline from the $7.20 Dec. 19 high is most likely complete and the stage has been set for a rally phase,” he wrote in a note to customers Tuesday.

However, Coberly is not about to suggest prices will rebound with the same vigor as has been exhibited by natural gas in past rallies. Instead, he looks for a base-building period, which could see February future prices extend to the $6.77 to $7.20 area. Trading below $6.00 in February futures would cast this outlook in doubt and raise the probability prices are headed back to $5.50-65.

On the fundamental side of the market, traders will get their weekly fix of important supply data a day early when the Energy Information Administration releases storage data at noon EST Wednesday. Predictions are centered on a net withdrawal of 120-150 Bcf, which could be considered bullish versus year-ago and five-year average draws of 95 Bcf and 110 Bcf respectively. And while the market will undoubtedly respond to the news, it will have to do so quickly. Futures trading at Nymex will halt for the first of two four-day holiday weekends at 1 p.m. EST Wednesday.

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