December natural gas futures opened lower Tuesday, immediately probing the downside, but rebounded after failing to test the overnight Access low at $4.585. It bounced up to a high of $4.790 at 11 a.m. EST before relaxing and then trading sideways the rest of the day. The near-month contract managed a 2.2-cent daily gain, ending the session at $4.727. The January contract slipped 0.6 cents to $4.977, February added 0.4 cents to close at $4.982, and March slid 0.1 cents to $4.887.

There were “relatively weak moves in both directions,” said Tim Evans of IFR Pegasus. “The market seems reluctant to trend until it gets additional fundamental information.”

That probably won’t arrive until Thursday morning’s EIA weekly gas storage report, which many are expecting to show another relatively large gas storage injection of 40-50 Bcf, compared to the 20 Bcf build during the same week last year.

“A build of only 24 Bcf would eliminate the storage deficit to last year,” noted Kyle Cooper of Citigroup. “A build of 31 Bcf would actually lift inventories to 2001 levels. Natural gas prices in 2001 were at $3.25 at the end of October. They were in the mid-to-upper $2.00 range by the middle of November 2001.”

However, the bearish implications of another large injection and the destruction of the year-on-year deficit could be offset partially by the new cold front that is expected to produce sub-freezing low temperatures in the Northeast and Midwest this coming weekend.

“Prices need to break above the nearby resistance at $4.79-4.80 in order to spark a fresh try for the $5.024 peak from Monday’s trade or higher levels,” said Evans. “The failed support at $5.12 and the $5.325 high from Oct. 22 are further mileposts along the road north, if December can manage to turn the recent trading range into a technical base of support.”

If the market once again turns south, a drop through the $4.585 low from Monday night Access trading would firmly establish the bearish track, Evans predicted, with “the $4.39-4.40 spot lows from September-October becoming the focus of attention.” He said new lows would begin to suggest last November’s lows at $4.11 and $3.74 as new objectives for this market.

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