Bringing the tally to four days of consecutively higher settlements, November natural gas futures Wednesday soared during the session to put in a $6.180 high before slipping lower to close at $5.995, up 23.6 cents on the day. One broker attributed the move to a combination of Indian summer-like temperatures in the East and a bounce off of significant support late last week.

Since November took over as prompt month and settled at $5.392 last Thursday, the contract has climbed 60.3 cents over four consecutive regular sessions. However, whether the recent activity means the market has already established a bottom for the downtrend remains to be seen.

“I think one of the reasons we bounced is due to technicals,” said Steve Blair, a broker with Rafferty Technical Research in New York. “The day after October’s expiration, the November contract got down to the $5.35 area, which is a pretty significant support level. I think we really got the initial bounce off of that.”

Blair added that the bounce might also be attributable to the recent reports of voluntary production shut-ins from Chesapeake Energy and Questar Exploration & Production Co. (see Daily GPI, Sept. 28; Oct. 4). “While news of the shut-ins means less gas for the market, the companies are shutting in the production because there is too much gas already here, so I think overall it is bearish to the market.”

Current temperatures also play a part, Blair said. “Lately, it has been looking a lot like an Indian summer,” he said. “It has been in the 80s in New York the last couple of days, so air-conditioning demand is still around. Temperatures are supposed to drop significantly Thursday, so it will be interesting to see what the market thinks of that.”

As for whether a bottom has been made yet, Blair said it was too early to tell. “Some traders think this market is going to take off once winter gets here, but I am not so sure,” he said. “I think we are going to need some significant cold for a sustained period of time to really see prices jump higher.”

Prior to Wednesday’s trading session, enerjay LLC broker Jay Levine wondered what it would take to see a meaningful bounce in prices. “The trend is down because there were not enough reasons to keep prices up — plain and simple,” Levine said. He noted that psychology in the form of fears mostly, and technicals in the form of charts, can only go so far. However, he noted that if fundamentals are “bearish enough long enough, it becomes that much more difficult to advance, much less maintain, prices, which is what the market is currently seeing.”

Levine said a reversal of prices might take more than just a colder than normal winter. “Natural gas has struggled in almost every respect, given storage and the lack of any supply disruption, and it will likely take more than just a below-normal winter to help turn things around, but you never know…when something unexpected pops up catching the market napping.”

The broker said he still thinks the market’s behavior over the last few months has been a short to intermediate downtrend within the context of a larger and longer-term bull market. For support, Levine sees pretty good support at $5.525, followed by $5.315 and $5.045. As for resistance, the broker highlighted $6.010, followed by $6.150, then $6.745.

Turning attention to Thursday morning’s Energy Information Administration (EIA) storage report for the week ended Sept. 29, industry projections seem to mostly range from an injection in the mid-60s Bcf to and injection in the mid-70s Bcf. The number revealed Thursday morning will be compared with last year’s 45 Bcf build and the five-year average injection of 66 Bcf.

A Reuters survey of 22 industry players centered on an average build of 74 Bcf, while Golden, CO-based Bentek Energy said Wednesday that it is looking for a 65 Bcf build, with a 36 Bcf injection in the East region, a 20 Bcf injection in the Producing region and a 9 Bcf addition in the West region. The ICAP derivatives auction held after the close of Nymex floor trading Wednesday showed a consensus estimate of a 71.1 Bcf build.

With working gas in storage levels already sitting at a whopping 3.254 Tcf, Thursday’s build can only add to the supply glut.

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