After teetering above key long-term support for much of the session Friday, natural gas futures tumbled lower in the final minutes of trading last week as a wave of liquidation pressured prices to levels not seen since early January. The prompt month April contract was the hardest hit by the selling, falling down to a low of $5.05 at 2:30 p.m. EDT. April closed at $5.128, down 17.8 cents for the session.

Even though it declined 3.4% on Friday and briefly ducked beneath support in the $5.10 vicinity, the April contract was not a complete loss. In fact, considering the extremely mild weather that was predicted for the weekend and the corresponding fall in cash prices, traders were even a little impressed by the market’s performance. “It could have been a lot worse,” a cash trader said. “The market was sort of lackluster and that played in favor of the bulls [Friday]. A settlement below $5.10 or $5.00 would have been brutal,” he reasoned. Cash prices remained at a discount to April futures as NGI’s Henry Hub index dipped 14 cents to $5.06 for weekend supply.

Looking ahead, analysts and market watchers differ on the market’s next price move. Bears are able to point to moderating weather and slack demand that takes hold of the market every spring as a reason for a continued price slide. Bulls, meanwhile, think that the record low level of storage will give buyers a springboard with which to propel prices should injections fail to measure up to expectation and/or historical averages come early April.

“While the 636 Bcf left in storage at this point is still both a near-term and longer-term bullish factor, it is clearly not enough of a surprise at this point to put a firm floor beneath prices,” wrote Tim Evans of New York-based IFR Pegasus in a note to customers Friday. “We think the market is also shifting right into shoulder-month mode, where prices may simply rest for a while, before walking higher if injections to storage show signs of lagging,” he said, adding that in time nuclear plant maintenance in conjunction with early cooling demand will help push prices higher.

However, this rebound to higher levels may be contingent on the market’s ability to hold support in the $5.05-10 area. “Trading below $5.08 will say this support area has failed and a decline to $4.77-80 support area is under way,” chipped in Craig Coberly of GSC Energy in Atlanta. Other traders agree with this assessment and point to sell stop-loss orders, which are believed to exist below or around the $5.00 area, and could whisk prices lower if triggered.

On the upside, argues Ron Barone of UBS Warburg, is last week’s storage withdrawal, which at a hefty 85 Bcf suggests that demand destruction is not as profound as originally thought. “It also suggests that merchant capacity holders continue to withdraw supplies aggressively to capture current attractive market pricing that may deteriorate in the months ahead,” he wrote in a research note Thursday.

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