Backed by the recent stretch of colder weather in a number of high-gas demand regions, traders continued to keep upward pressure on the natural gas futures market on Tuesday as the front-month contract made yet another new high — both outright and on a closing basis — for the bull move that began three months ago.

After recording the day’s low at $5.376 in morning trade, January futures moved higher for the remainder of the session, reaching a high of $5.530 before closing the day at $5.523, up 19.1 cents from Monday’s finish. The front-month contract hasn’t traded or closed higher than it did on Tuesday since Jan. 12.

A number of industry observers said the recent market strength likely reflected the belief that extended cold could put more than a dent in the current storage glut, which could bring supply and demand more into balance.

Citi Futures Perspective analyst Tim Evans said futures headed even higher on Tuesday “with the market anticipating a sharper storage withdrawal in Thursday’s DOE [Department of Energy] report along with the impact of some ongoing, cooler-than-normal temperatures. However, the day-to-day change in the temperature outlook is only mixed, with the six- to 10-day [forecast] slightly warmer and the 11- to 15-day outlooks slightly cooler than they were on Monday.”

Due to the rapid rise in prices and the market’s current fundamentals, Evans said he isn’t so bullish in the near term. “We’re…growing cautious regarding short-term market direction as the price recovery in January futures from the $4.459 settlement of Dec. 3 to current levels has already priced in a considerable volume of heating demand and at least some of the resulting decline in the year-on-five-year average storage surplus,” he said. “As a result, we’re shifting our short-term stance from bullish to neutral.”

Last week the cold and storminess that raked the Midwest and Ohio Valley prompted well above-normal heating requirements, but if estimates by the National Weather Service (NWS) are correct, heating requirements this week should be only slightly less onerous. For the week ended Dec. 12, New England recorded 245 heating degree days (HDD), or 17 more than normal; the Mid-Atlantic had 232 HDD, or 21 above its normal tally; and the Midwest from Ohio to Wisconsin shivered under a stout 278 HDD, or 37 more than normal.

This week New England and the Mid-Atlantic are close to last week’s accumulation, but the Midwest gets a breather. For the week ending Dec. 19, NWS says New England will see 243 HDD, or three fewer than normal; the Mid-Atlantic 225, two fewer than normal, and the Midwest will see 254 HDD, 24 fewer than last week and four fewer than normal.

Hencorp Futures broker Tom Saal, in his work with Market Profile, suggests that January futures will “eventually” test a third value area up at $5.946 to $5.818.

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