Natural gas futures bulls put in a new high for the up move on Tuesday but in the end were not able to capitalize on the momentum. June natural gas recorded a high of $11.364 just before noon EDT before retreating in the remainder of the regular session to finish the day at $11.150, down 2.8 cents from Monday.

The $11.364 just barely topped the old $11.360 high for the move recorded back on April 28. Despite the retreat from the highs, traders are nowhere near ready to call the bull move dead yet, especially with the current fundamentals and technicals. As of April 25 natural gas storage had 255 Bcf less than last year at the time and 3 Bcf below the five-year average. On top of those deficits, there are those in the market that are concerned about the industry’s ability to refill storage before winter, especially with LNG cargoes regularly going to higher-priced markets (see related story) and the 900 MMcf/d Independence Hub in the Gulf of Mexico still off-line (see Daily GPI, May 5).

Crude futures have also been a supporting force as the commodity continues to post record highs. June crude Tuesday blasted north of $122/bbl before closing at a record high settle of $121.84/bbl, up $1.87 from Monday’s close.

“We rallied up with crude oil, but failed to sustain the higher prices. When the momentum ran out, we settled lower on the day,” said Tom Saal of Commercial Brokerage Corp. in Miami. “Regardless of the failure, we are still pretty strong here. We haven’t retreated very much and the market looks pretty comfortable still. We could see some more retracement Wednesday, but I don’t think that $11.360 level looks like a top yet. We’ll need to see a far larger retreat before we can begin to talk about tops.”

Looking at resistance points above $11.360, Saal said his charts point to $11.880 followed by psychological resistance up at $12. “I think we could still see those higher prices,” he added. “Once we finally got above $10 and settled there for several days, the market started to get comfortable with double digits, which opened a whole new level of prices. We’ve kind of started to go higher from there. I relate the phenomenon to people filling up at the gas station. We got used to $2.50 gasoline, then $3, and now $3.50 is in play. People get a little more comfortable after we have been at a price level for a little while. The higher prices don’t seem as out of line as they once did.”

The weather picture look a little muddled over the next week, but the edge would probably go to the bulls if meteorologist Elliot Abrams’ forecast holds up.

He noted that a weak area of high pressure is dominating the northeastern quarter of the country Tuesday and should hold through Wednesday. “On Thursday, a cold front will move to a line from northern New England to Arkansas. The storm at the southern end of the front will then proceed east-northeastward to reach the East Coast in time to cause rainy weather for much of the region on Friday,” said Abrams, who is’s Northeast U.S. expert. “If the storm is strong enough to draw dry air in behind it, clearing would take place for Saturday and the dry weather could hold well into Mother’s Day. However, there is a lot of uncertainty about this, so you can expect forecast changes as we go through the week.”

Abrams also warned that it might not be wise to put your long-sleeved shirts away just yet. “Looking ahead to next week, it appears that our progression toward summer weather will be halted and reversed,” he said. “Just as we have warm spells in November, we can have chilly spells in May. The GFS [Global Forecast System] in particular predicts a series of low-pressure areas to bring rain and promote a cooler-than-usual temperature pattern.”

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.