With the near-term weather outlook pumping some life into the bulls’ case in Sunday’s overnight Access session and again on Monday morning, April natural gas futures on Monday ended up recording a high of $7.090 before settling at $7.007, up 36.1 cents on the day. The day’s close marked the first time since Feb. 24 that a prompt-month settled north of $7.

The run-up appeared to stall around 11 a.m. EST but a renewed push by bulls late in the session helped the natural gas prompt-month stay aloft. Some market experts cited recent weather forecasts calling for below normal temperatures over the next two weeks as reason for the run higher, even if they didn’t agree with the reasoning.

“We had a little bit of short-covering by funds, but it wasn’t a whole lot,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “Yes, there are going to be below-normal temperatures in a number of high gas demand regions for the next two weeks, starting on Wednesday,” he added. “What people are not realizing is it just does not matter. We have plenty of gas in storage to handle the weather, and there is not going to be much more cold following that two week span. Spring is coming.”

Kennedy said he does not currently see any bullish case here. “On the downside, you are not going to see much below $6.50 because the hedging is going to start for the summer months,” he said. “I really think anyone who became a bull on this run-up will be a steer by the end of the week.”

IFR Energy Services analyst Tim Evans said the entire energy futures complex is starting the week in a more positive frame of mind. However, he warned the rally is “largely technical at this point,” without bullish fundamental news that would spark a larger or more sustained advance.”

Joining natural gas futures on the plus side on Monday was April crude, which finished $1.81 higher at $61.77/bbl, while April heating oil and April unleaded gasoline increased by 5.32 cents and 5.52 cents, respectively, to $1.7378/gallon and $1.7433/gallon.

“Without some kind of supply disruption to offset the relatively weak demand and supply/demand excess, the downside will remain open over the intermediate to longer-term, [Monday’s] bounce notwithstanding,” Evans said.

Some analysts prior to Monday’s action were already beginning to sense a slowdown in bearish momentum. “The natural gas is looking more and more like a market that is running out of fresh selling following a long, extended price decline,” said Jim Ritterbusch of Ritterbusch and Associates. He noted a lot of bearish news was absorbed last week but the nearby futures only shed about 2% of value.

Ritterbusch added the response of traders to last week’s smallish 85 Bcf withdrawal spoke volumes about the market’s current leanings. “The ability to shrug off the bearish storage stats on Thursday, and Friday’s gains in the face of an exceptionally weak oil trade were particularly notable,” he said. “Furthermore, an evolving rounded bottom chart formation and the possibility that the funds are losing interest in the short side of the market are supportive considerations.”

However, the funds may not have lost interest just yet. As of March 7, noncommercials appeared willing to stay on the short side of the market. The Commodity Futures Trading Commission reported Friday that as of March 7 noncommercials held a net short position of 41,866 (futures only) contracts, a healthy increase from the 39,169 net short positions from the week earlier.

Some colder than normal temperatures appear to be on the horizon. According to the National Weather Service’s latest six-to-10-day forecast covering March 19-23, below normal mercury readings will be prevalent for the entire West, most of the Central states and the East, from North Carolina up, while the Southeast is expected to display normal temperatures for the time period. The bottom tip of Texas and the northern half of Alaska are the only parts of the country expected to come in with above normal temperatures for the period.

Others see more fundamental factors determining the longer-term direction of prices. “Once the remaining shut-in Gulf production is back online, it — together with the high inventory levels — will put continued downward pressure on natural-gas prices,” said James Williams of WTRG Economics. For now, “the only real support for gas this summer will be fear of a repetition of last year’s hurricane damage.”

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