One day back above $6 appeared to be enough for the time being as February natural gas futures, in their first regular session prompt-month contract action, slipped back below the psychological price level. Backed by a somewhat moderating weather forecast and the continued economic slump’s impact on demand, the February contract dropped 22.5 cents Tuesday to close at $5.859.

“The natural gas market is giving up some of Monday’s gains, now that the January futures are off the board and the immediate time pressure to exit positions has been removed,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “The weather outlook might also be incrementally less bullish, with the most intense cold in the 11- to 15-day forecast now looking like it might average only 12-16 degrees Fahrenheit colder than normal in much of the East. Readings for the West also look somewhat warmer than they did a day ago.

“Overall, however, this is still a clearly bullish weather pattern that will translate into above-average storage withdrawals that will tip the market from year-on-five-year average surplus to deficit. This suggests that pullbacks in price are really buying opportunities from a fundamental perspective.”

Turning attention to the storage situation, the Energy Information Administration will release its report for the week ended Dec. 26 one day early due to the New Year’s Day holiday Thursday. The report will go live at noon EST on Wednesday.

Evans said he is expecting a 170 Bcf draw, while a Reuters survey of 17 industry players produced withdrawal expectations from 100 Bcf to 189 Bcf with an average pull expectation of 151 Bcf. A draw of 150 Bcf to 170 Bcf would be bullish on a historical comparison chart as only 109 Bcf was removed last year for the similar week and the five-year average pull is 100 Bcf.

Near-term forecasts show well-below-normal heating requirements for populous U.S. energy markets. For the week ending Jan. 3 the National Weather Service (NWS) predicts that New England will see 223 heating degree days (HDD), or 49 fewer than normal, and New York, New Jersey and Pennsylvania will have 207 HDD, or 45 fewer than normal. The Midwest from Ohio to Wisconsin is forecast to have 236 HDD, or 50 fewer than normal.

The NWS starts counting HDDs as of July 1. NWS said as of July 1 New England has tallied 2,307 HDD, or one fewer than normal, and New York, New Jersey and Pennsylvania have had 2,016 HDD, or 32 fewer than normal. The Midwest has had 2,337 HDD, or 27 more than normal.

However, the bulls do have a ray of hope. January’s heating requirements are likely to be greater than normal, according to a leading analyst. Peter Beutel of Cameron Hanover suggests that as January approaches, temperatures for the month will gravitate to colder than normal.

“Initial forecasts for January 2009 called for warmer-than-normal readings. Now, though, as we are on January’s doorstep, the forecasts are calling for surprisingly cold temperatures. The eight- to 14-day forecast is calling for below-normal readings from the West Coast across the Midwest into the Northeast.”

It is Beutel’s observation that “in any year in which there is a discernible trend or tendency in the weather, forecasts tend to move nearer to the existing trend as we get closer to the forecast time period. That’s colder than normal for most of the first half of the coldest month of the year. That’s unwelcome news for consumers,” he said in a Tuesday morning note to clients.

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