After selling off for much of the week as temperatures moderated, natural gas futures bears took a little bit of a break on Friday as the March contract got as low as $5.094 before closing at $5.131, down seven-tenths of a cent from Thursday’s finish.

While the action on Friday was pretty muted, warmer temperatures and smaller storage draws gave the week a bearish tint. After trading between $5.350 and $6.110 for well more than a month, front-month futures broke through the bottom end of the range during the week. The February contract expired Wednesday at $5.274. The March contract ended up losing 61.9 cents for the week ending Jan. 29.

Despite the week of weakness, some market watchers are not expecting values to travel much lower, no matter what the weather picture looks like.

“Sure, things warmed up around the country, which brought in the sellers, but I think that stretch of brutal cold from late December through mid-January attacked the storage glut situation just enough to give bears pause about trying to push prices much lower,” a New York broker said. “We still have quite a bit of winter left, so if we were to see another lengthy cold plunge, we could see the whole supply-demand equation tighten significantly.”

While the broker noted that he doesn’t see a lot of room to the downside, he does expect the bears to further test support at $5. “I think traders could drive this thing down below $5, but I don’t think a move like that will have much staying power,” he added. “If we do put a four in front of this price it will be temporary, in my opinion. I think a breach of that price level would likely bring a round of short-covering into the market, which would create a nice little rebound.”

Weather forecasters are calling for cold followed by warmth. “The short-term numbers are colder than expected in parts of the Midwest and East Coast. Warming is still expected in the six- to 15-day [forecast],” said Matt Rogers, president of Commodity Weather Group of Bethesda, MD. He added that the warming was expected mainly in the Plains and Midwest, and cautioned that “the models continued to show evidence of (a) cold risk on the East Coast and (b) a return to a colder Midcontinent by late in the 11-15 [-day forecast period].”

Top analysts, however, see weather as a waning price driver in the weeks ahead. “As the weather declines as a significant driver of price, [the] market may be forced to focus more heavily on macro-type economic guidance such as [Friday’s] fourth quarter GDP [gross domestic product] data,” said Jim Ritterbusch of Ritterbusch and Associates. He added that recent natural gas market and equity market weakness may be linked. “To the extent that some of the recent weakness in natural gas futures has associated with the decline in the stock market, we feel that some bullish numbers in [Friday’s] release could further spike nearby futures.”

There was both good news and bad news with the 8:30 a.m. EST release of fourth quarter GDP data. The Commerce Department reported that the third quarter number had been revised downward from 2.8% to 2.2%, but the fourth quarter came in at 5.7%, ahead of expectations of 4.5%. Equity markets were pleased with March Standard and Poor’s Stock Index Futures adding more than 4.5 points to 1090.00 immediately after the release of the data. March natural gas futures, however, barely flinched.

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