December natural gas futures went off the board on Monday with a bang as the expectation of cold and last-day short-covering drove the contract 40.8 cents higher to expire at $6.888. January natural gas closed up 32.4 cents at $6.827.

Citi Futures Perspective analyst Tim Evans said the natural gas market was “sharply higher” Monday on a combination of short-covering ahead of December’s expiration and updated weather forecasts that show eastern cold continuing on into early December. “That said, futures are still chopping sideways within their broad trading range of the past two months and we remain concerned that if the market cannot manage a more sustained move higher in the near term, new lows could follow once temperatures moderate and a warmer spell arrives,” he said.

Some top traders are sitting tight for the moment as they see a market unable to move one way or the other. Mike DeVooght of DEVO Capital, a Colorado-based trading and risk management firm, advises trading clients and end-users to stand aside and producers with exposure to lower prices to hold on to a previously established strip of $10 winter puts established earlier at 65 cents. “The gas market has traded in a range between $6.05 and $7.33 for the past six weeks. The market is having a hard time finding a direction as the colder weather offsets the weaker economic news,” he said in a note to clients.

Weather bulls got a boost as the National Weather Service in its weekend forecast predicted that in the six- to 10-day period below-normal temperatures would envelop virtually the entire country. Only a small portion of Southern California between Los Angeles and San Diego and a small section of northern Montana were expected to be normal. All of Alaska was expected to be normal or above normal.

MDA EarthSat is not quite as aggressive in its six- to 10-day forecast. It sees the arrival of cold air later in the period but not as pervasive. “Heating demand is expected to remain above normal through next weekend and into the start of December as cold conditions continue across parts of the U.S. The East, though off to a seasonable (and possibly even briefly warm) start, sees a resurgence of cold at mid-period as another trough digs into the East,” said Matt Rogers, director at MDA EarthSat. The forecaster shows below-normal temperatures east of a sinuous line from East Texas to the Dakotas and excluding northern New England. Above-normal temperatures are expected in the Great Basin, Pacific Northwest and California.

The Energy Information Administration (EIA) is releasing its natural gas storage report for the week ending Nov. 21 one day early due to the holiday-shortened week. The report will go live on Wednesday at noon EST.

Evans said he doesn’t expect any surprises like last week’s report, which not only shocked because it was an injection when a draw was expected, but also because it contained an upward revision for two of the previous weeks. With all of the cold in the eastern half of the country last week, Evans’ early estimate is that 45 Bcf will be pulled out of storage for the week. The number revealed Wednesday will be compared with last year’s 7 Bcf withdrawal for the week and a five-year average pull of 13 Bcf.

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