Finishing off a week that saw front-month natural gas futures put in a new low for the downward move of the last five months, bearish traders kept their foot on the gas pedal on Friday as the January contract continued to put pressure on support levels.

After coming within a penny of the move’s $5.458 low from Tuesday, the January contract traded in a tight range for the remainder of Friday’s regular session before closing at $5.488, down 11 cents from Thursday’s close and 25.4 cents lower than the previous week’s finish.

Front-month futures traded in a tight 11.4-cent range Friday between $5.463 and $5.577. Despite the onset of cold and stormy weather through much of the Northeast and Midwest, it appeared the bulls were unable to recover momentum following Thursday’s bearish news that only 67 Bcf was removed from underground storage for the week ended Dec. 5. Going into the report, most industry estimates were for a withdrawal in the 80s Bcf.

“The natural gas market has seen some further price weakness as ongoing reaction to the smaller-than-expected 67 Bcf net withdrawal from natural gas storage for last week, part of a more general disappointment that recent bouts of cold for at least significant portions of the country have not translated into a shortage of inventory,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “Weaker oil prices are also adding to the bearish sentiment in natural gas.”

January crude, which reached a low of $40.50/bbl during the previous Friday, ended up closing Friday at $46.28/bbl, down $1.70 from Thursday.

“With the supply surplus against [five-year] average levels expanding back to 110 Bcf or 3.5%, this market is signaling a significant level of confidence regarding the ability to meet winter heating requirements,” said Jim Ritterbusch of Ritterbusch and Associates. He added that he thought a break below the recent four-day trading range was “likely” with the “January contract currently knocking on the door of our expected support area at the $5.460 level.”

In addressing energy futures, traders are attempting to factor in the continued economic deterioration in the wake of a legislative failure to reach agreement on an auto industry bailout. Efforts by Senate Republicans and Democrats late last week were unsuccessful in bringing a $14 billion auto rescue package to a vote. The failure to reach agreement raises the specter of a deepening recession and lower demand for fuels and less industrial use of natural gas. According to CNN.com, however, the automakers could still get help in the form of Wall Street bailout funds.

In spite of all the bearish news, natural gas bulls are ready, albeit at lower prices. Phil Flynn of Alaron says to “buy January natural gas at $5.10 — stop $4.70.”

Taking a peek at the weather forecasts, Frontier Weather said the Dec. 17-21 period would likely see below-normal temperatures in the West, Plains and portions of the Midwest, while above-normal readings would likely be found from Texas through the Southeast.

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