Wednesday’s increase of a couple of pennies proved to be a mere pit-stop for natural gas futures rather than a change in market direction as the December contract resumed its larger downward slump on Thursday.

After reaching the day’s low of $4.357 early during the regular session, the prompt-month contract rebounded to a high of $4.488 before retreating once more. December gas closed at $4.370, down 13.3 cents from Wednesday’s finish.

Traders didn’t have their normal Thursday fundamental indicators as the release of the natural gas storage report for the week ending Nov. 6 was pushed back to Friday due to the Veterans Day holiday. Most industry estimates are for an injection in the high teens to low 20s Bcf (see Daily GPI, Nov. 12).

“You have to remember we have 3.8 Tcf in storage already and not a lot of room for much more,” said Steve Blair, a broker with Rafferty Technical Research in New York. “Friday’s storage data will be interesting, especially because the futures market has been acting strangely on the last couple of reports. It’s not always responding the way one would think based on the injections. The anticipation is heightened this week because the report is coming out on Friday right ahead of the weekend.”

Blair identified the $4.380 price point as a “very important” pivot point. “It’s not surprising that the market got down to $4.380. Over the last six or so months, the market has had some support and resistance problems in that price area. Interestingly enough, the cash market is extremely weak and is only expected to be weaker on Friday due to lightened weekend demand. We don’t know yet whether futures will follow or not, but it could depend on what the storage report reveals. Bigger picture, I don’t think we are going a whole lot higher or lower until something changes. Once the weather turns decidedly cold, we should see a rebound in prices.”

Natural gas bulls continue to fight an onslaught of near-term forecasts calling for above-normal warmth throughout major natural gas markets. “Warmer-than-normal temperatures are forecast over most of the northern tier of the country. Anomalies as warm as 10-15 degrees above normal are anticipated over the north-central U.S.,” said forecaster WSI Corp. of Andover, MA. It added that “seasonable and seasonably cool readings are expected to prevail along the West and Gulf Coasts.”

Adding insult if not injury to the bullish cause, WSI said errors in the forecast might trend to still-warmer temperatures. They “may trend a shade warmer over most of the country than currently forecast, [and] all models advertise the EPO [Eastern Pacific Oscillation] will remain in a negative phase in late November. The West Coast may trend a shade cooler than currently forecast.”

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