In its first action as prompt month, February natural gas futures bounced off a $6.090 low in Wednesday overnight Globex trading and continued to explore the upside in Thursday’s open outcry trading session. The contract reached a high of $6.365 on light trade before settling at $6.248, up 10.6 cents on the day.

“In my opinion, I think the only reason the market got under $6 on Wednesday was because of the January contract’s expiration. The Henry Hub price was so much under futures,” said Steve Blair, a broker with Rafferty Technical Research in New York. “That $6 level is a pretty big support level for us. It was in January and it is also in February.

“Thursday’s action really did not surprise me a lot. We got down to around $6.09 in overnight Globex and we bounced from there,” he added. “We ended up finishing the day 10 cents higher on a very quiet market. There just is not a lot going on.”

With Nymex energy contracts settling early at 1 p.m. EST on Friday, traders are eyeing the small window of trading that will follow the Energy Information Administration’s (EIA) 10:30 a.m. EST natural gas storage report for the week ended Dec. 22.

Blair noted that the natural gas storage report release should be interesting to watch due to all of the absences in the market. “I think a lot of people were a little taken by surprise that the EIA pushed the storage report to Friday this week and next week,” he said. “Normally when there is a Monday holiday, they push the petroleum report to Thursday but leave the natural gas inventory report in place. It really could be seen as either rewarding the people who stayed through till the end of week or disturbing some of the people who were hoping to extend their year-end holiday.”

Blair added that the thing to keep an eye on next week is whether the exchange will be closed one day nexy week in observance of former President Gerald Ford’s passing. Nymex has closed in the past for a day of mourning upon the deaths of former presidents Reagan and Nixon, a Nymex spokesperson said. Ford will lie in state in California and Washington, DC, before interment Jan. 3. It is likely Nymex will follow the lead of the New York Stock Exchange, sources said.

“We will have to see what day President Bush makes a national day of mourning,” Blair said. “I think that will have a lot to do with Nymex’s decision.”

Late Thursday, the U.S. government said Tuesday Jan. 2 would be a national day of mourning. In response to the news, a Nymex spokeswoman said that the exchange had still not yet made a decision on its plans.

As for the futures market’s current direction, Citigroup analyst Tim Evans said the weather picture still has bulls boxed in. “Given that the recent warmer-than-normal temperatures seem to blend into the six- to 10-day, 11- to 15-day and long-range forecasts, [the natural gas storage surplus] could be with us for quite some time,” he said. “In fact, we note last week’s long-range update from the National Weather Service features warmer-than-normal temperatures for some portion of the continental U.S. for every period through March 2008, so it could be a very long wait for enough cold to help deplete storage to a critical degree.”

Focusing on Friday’s storage report, enerjay LLC broker Jay Levine said the industry’s expectations appear to be all over the chart. “Wide range of estimates even as the [natural gas futures] complex remains susceptible and still feels heavy — highlighted by choppy, uneven trading, with multiple reversals likely — even as market participants become thinner by the minute.”

According to a Reuters survey of 22 industry players, the range of withdrawal for the week is 44 Bcf to 101 Bcf while the median drawdown was 64 Bcf. The ICAP storage options auction revealed a consensus 55 Bcf withdrawal.

Golden, CO-based Bentek Energy’s storage gas flow model methodology is looking for a 46 Bcf withdrawal, while the company’s supply/demand balance model is projecting a 34 Bcf withdrawal. The flow model breakdown is calling for a 25 Bcf withdrawal in the East region, while 23 Bcf will be removed from the West region and the Producing region actually injects 2 Bcf.

Whatever the number is, it is almost certain to fall well short of the 162 Bcf pull last year and the 127 Bcf five-year average withdrawal.

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