Natural gas futures bulls were licking their lips Friday as the March contract showed some real strength on the day. Despite the temporary warm-up forecasted for much of the country, prompt-month futures pushed higher on the day to close at $4.774, up 13.2 cents from Thursday’s finish and 35.7 cents higher than the previous week’s close.

After beginning Friday’s regular session and almost immediately putting in the day’s low of $4.522, March natural gas rebounded for the remainder of the session, recording a high of $4.807 just before 2 p.m. EST. Another bullish sign is that Friday’s $4.774 close is the highest prompt-month futures have finished a regular session since Jan. 21 when the February contract closed at $4.780.

“The bulls had a strong day on Friday, but I’m not sure just how much we should read into it,” said a Washington, DC-based broker. “It was a back and forth day on oil, but natural gas stayed strong for a vast majority of the regular session. We even had a pop higher at the close. It was telling that after we got to $4.800, traders did not grind it all of the way back into the mid $4.50s.

“I would say it is an encouraging close from the bulls’ point of view. However, in the broader picture we did not break above any of the important resistance levels. We still need to settle above $4.830 — the front-month high from Jan. 21 — before we can see whether there is any real length to this thing. If we get through that level in the short term, then we are looking a little bit better.”

As to whether a bottom has been installed for the greater move lower, the broker said it is possible that the $4.280 low from Feb. 2 could stand. “The case can be made that we’ve made a nice rounding bottom pattern here; however, we’ve been burned before. Back when we were chopping back and forth in late December I thought that was a bottoming too, but then we lurched down another buck and a half. This time around it was more gradual, so it might stick. From a purely technical point of view, it is looking a little more promising as a bottom, but by no means does it look like we are going to see a huge breakout here.”

He noted that with winter fading, the economy is really the only thing that is going to be calling the shots in the near term. “I’d argue that we are running out of winter despite what Punxsutawney Phil says, and the general economic numbers continue to look dismal, so it becomes a question of rig count versus lack of demand because there is no economy to consume energy,” the broker added. “Clearly the drill operators are responding and laying down rigs, but then they are selling less and less gas on the other end because of lack of demand. Will the production cuts become the tail of the dog with the lack of demand being the real story? People are wondering whether the bailout plan and the economic stimulus plan will do the trick of turning the economy around, but I think that is far from certain right now. For that reason I think any rally might have a tough time getting going.”

Jim Ritterbusch of Ritterbusch and Associates said despite the recent uptick in prices, he is not so sure that the downside is finished. “[W]e remain unconvinced that price lows in this market have been placed, and as a result, we suggest holding any short 2009 positions, adding on any price rallies toward the $4.80 area referencing March futures,” he said Friday morning.

The economic situation continues to look bleak. The 8:30 a.m. EST Friday release of January employment data showed a higher number of jobless than previously expected. The Labor Department reported the loss of 598,000 jobs, well above the 540,000 anticipated by economists. The December report revealed job losses of 524,000 and Friday’s reported losses are the fifth consecutive month of job losses over 400,000. A Bloomberg survey of 74 economists estimated that the unemployment rate rose to 7.5%, the median of the survey, and was up from December’s rate of 7.2%. The actual figure came in at 7.6%.

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