After opening lower in sympathy with weaker cash prices, the natural gas futures market worked its way back to unchanged Monday as traders groped for fair value amid contrasting weather outlooks.

The December contract finished the session at $4.711, up 0.5 cents for the session and more than a dime above its earlier low at $4.60.

Traders agreed that the market lacked leadership Monday. “Cash opened 10 cents lower Monday and the futures market followed suit,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “However, there were no dominant bears out there and the selling quickly dried up,” he continued, noting the lack of consensus between private and governmental weather outlooks.

Specifically, Kennedy pointed to an Accuweather forecast suggesting the weather from New York to Chicago would cool down for the upcoming weekend following a brief midweek warm up. That forecast, however, contrasts sharply with the latest six- to 10-day forecast from the National Weather Service, calling for continued above-normal temperatures for much of the country through early next week.

To further compound the issue, there is no clear consensus on this week’s storage report with market-watchers calling for injections to tally anywhere from 15 to 40 Bcf. Kyle Cooper of Citigroup, who calls for a build slightly more than the 34 Bcf figure announced last Thursday, is quick to note that the storage surplus will likely swell to a more 100 Bcf above the five-year average and more than 175 Bcf above the three-year average.

And while the fundamental data may suggest there is more room to the downside, the charts are looking higher, technicians agree. Specifically, they are pointing to the collection of lows over the last 10 trading sessions in the $4.60-66 trading area as proof the market is forming a bottom. For confirmation the trend has turned higher, Tim Evans of IFR Pegasus in New York would like to see a rally above Friday’s $4.80 high. Should the market achieve this feat, Evans looks to enter into a long position by using a $4.83 buy stop. A $4.56 sell stop would limit his initial risk on the trade.

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