Despite moderating weather and falling cash prices, the natural gas futures market trudged cautiously higher Tuesday in light trading volume. The April contract finished the session up 4.5 cents at $5.438. The out months followed suit, achieving lesser gains of 3-4 cents. At 47,533, estimated volume was weak and confirms the lack of consensus over the next price leg.

Market watchers polled by NGI Tuesday agreed that gas futures were holding steady in sympathy with stagnant crude oil prices and ahead of fresh storage data due out Thursday. “Natural gas prices joined with the petroleum complex in largely marking time on Tuesday, as traders hunker down for the next round of inventory statistics,” noted Tim Evans of IFR Pegasus in New York.

“In that regard, we see Thursday’s storage report as most likely a bearish threat, with 40-50 Bcf in net withdrawals falling short of both the 75 Bcf draw from a year ago and the 102 Bcf drop posted a year ago,” he continued.

Meanwhile, Mississippi-based Stephen Smith Energy points to the “freakishly warm week” ending March 5 as the key determinant in its 24 Bcf withdrawal estimate. “Heating degree-days were 48 HDDs (29.5%) below normal for the week ending Mar-05 (116 vs. 164). There was a sequential decrease of 46 HDDs (or 29%), which is the dominant reason for the weaker projected 24 Bcf draw this week as compared with the 96 Bcf draw for Feb-27,” SSE wrote in a note to clients Monday.

Looking ahead, the sell-now buy-later mentality is gaining some traction, according to Evans. “We think a break below Monday’s $5.35 low would renew worries about the downside, with that $5.20 floor seeing a retest,” he continued.

On the upside, Evans points to a bull flag or pennant continuation pattern that suggests the move lower will be short-lived. Such a pattern implies an eventual breakout above the $5.56 high from Friday and the $5.60 peak from March 2 with a target consistent with a test of the failed spot support in the $5.90-6.00 area, he speculated.

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