Caught between longer-term bearish fundamental market conditions and shorter-term bullish technical factors, the natural gas futures market chopped sideways to higher in relatively light trading activity Tuesday. And while neither side could claim the day as a victory, the market finished on a positive note, with the June contract ekeing out a 3-cent advance to close at $6.476.

“Bulls don’t have a lot to hold onto here to sustain these price levels,” noted Brad Florer of ICAP Energy. “Fundamentals continue to point lower. The weather is a non-factor. Until we get some cooling load, the bulls will have to settle for small victories like today.”

According to the latest cooling degree day forecast released by the National Weather Service, below-normal temperatures will keep air-conditioning demand down for at least the next week or so. Specifically, the NWS predicts cooler-than-normal temperatures for the large gas consuming markets of the Mid-Atlantic and Upper Midwest. For the week ending May 21, the NWS expects the states of New York, New Jersey, and Pennsylvania to see 0 CDD, six fewer than normal. The industrialized states of Wisconsin, Illinois, Indiana, Michigan and Ohio are forecast to receive 0 CDD as well, 12 fewer than normal.

However, others view the market’s inability to plow lower as a sign of an impending trend change. “Reaching the $6.35 [July contract] objective is still possible, however, the downside momentum appears to be decreasing and the bottom of the decline could come at any time,” wrote Craig Coberly of GSC Energy in a note to customers Tuesday. “Trading above $6.63 [July contract] will give reasonably good early evidence the decline is complete.” The July contract advanced 2.7 cents to $6.542 Tuesday.

Looking ahead, gas traders will take their next clue from fresh inventory figures to be announced Thursday morning. Early expectations for that report center on an 85 Bcf net injection. If realized, a build of that magnitude would exceed both the year ago injection of 84 Bcf as well as the five-year average increase of 75 Bcf. As of May 6, U.S. storage levels stood at 1,509 Bcf, 217 Bcf above 2004 levels and 275 Bcf above the five-year average.

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