Natural gas futures traders continued their rudderless approach to trading on Wednesday as the February contract bounced between $5.978 and $5.784 before closing the day’s regular session in the middle at $5.872, down 11.1 cents from Tuesday’s close. Traction for a price move in either direction remained unavailable as fundamentals ranged from the recent bullish cold in the East to bearish natural gas storage withdrawal expectations for the week ended Jan. 2.

“I don’t think the bulls or bears have enough going for them at this time to push prices definitively in one direction or the other,” said a New York trader. “In order to get us out of this trading range to the upside we are either going to have to have some much-colder-than-normal weather stick around for an extended period of time, or a string of much-larger-than-normal storage withdrawals. The more difficult trick would be to fall lower than the $5.210 low from Dec. 22. In order to put in a new low, we would need to see a real warm-up and some anemic storage draws. I just don’t see either scenario happening anytime soon, there is no impetus right now.”

Market technicians also don’t see the market going anywhere anytime soon. “We have been emphasizing that in wave count terms, the bears have no case on any breakout above the $6.285 level,” said Walter Zimmerman of United Energy. He added that on Friday prices fell sharply from a $6.240 high, creating a bearish cloud cover on the daily candlestick chart. “Or was Tuesday a more neutral spinning top? Whatever it was, it failed to better critical resistance. For now further congestion appears likely,” he said in a note to clients.

Others taking a close look at the supply-demand balance suggest that storage will gain significantly relative to last year as the economic slowdown crimps industrial demand. “At the present time, static indications indicating a modest supply surplus against five-year averages of only about 55 Bcf wouldn’t carry much bullish significance,” said Jim Ritterbusch of Ritterbusch and Associates. He noted that this year is somewhat different in that producers have been unable to reduce output fast enough to compensate for demand slippage from the industrial sector, which has quickly proven to be greater than had been previously anticipated.

“We feel that the dynamic of a major storage surplus expansion during this quarter will set the stage for an unusually high supply base with which to begin the injection period next spring. This will tend to restrict upside price progress in the more distant contracts despite the need to maintain some hurricane premium beyond the summer months,” he said.

The bulls likely won’t be able to capitalize on Thursday morning’s storage report if industry withdrawal expectations hold up. Most estimates for the week ended Jan. 2 appear to be for a withdrawal between 75 Bcf and 85 Bcf. A Reuters survey of 22 industry players produced a range of pull expectations from 48 Bcf to 116 Bcf with an average draw expectation of 79 Bcf.

After addressing early release bugs over the past few months, the Energy Information Administration’s storage report will return to its original 10:30 a.m. EST release time on Thursday. The number revealed Thursday morning will be compared to last year’s 171 Bcf withdrawal for the week and the five-year average pull of 78 Bcf.

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