Continuing its recent run of ping-pong trade sessions, March natural gas futures followed Friday’s nearly 16-cent drop with a gain of 14 cents on Monday to close at $4.557. More importantly, the prompt-month contract put in a new low for the move in overnight Sunday trading — proving that the bottom is not in just yet.

Prior to Monday’s regular session open, the March contract put in a 28-month low of $4.280. The last time front-month futures traded that low was back on Sept. 27, 2006. Despite the new low, some traders are getting a little sick of the ups and downs of the past couple of weeks, because the fundamentals and technicals are so conflicted.

“The entire energy complex has been going back and forth in a small range over the past number of sessions. It is particularly frustrating in natural gas because of where we are on the calendar,” said a Washington, DC-based broker. “Typically we would be expecting to see a bottom right about now. However, it is not a typical year. The economy is in the tank and we have soft demand, but thank goodness there has been some weather to provide some support. Without the cold, I can’t imagine where this market would be trading.”

The broker noted that Monday’s $4.280 low came was very close to his objective at $4.250. “This is a Fibonaci number and also offers some support in the system going back to 2003,” he said. “Whether this is as low as we go, I don’t know. We’ve had lousy demand and a reduction in rigs in operation, but production is still high because of all of the production that was initiated when prices were $13/Mcf. It is a very complex, sad situation and natural gas has been a very difficult market to trade as a result. I would love to tell you that we are in the process of putting in a bottom, but I’m not entirely sure that I am right on that.”

Looking at things from an Elliot Wave point of view, the broker said it is very possible to say that the market is in the process of completing a final fifth wave down. “If that is the case, then we could see a bottom. I have a technical objective of $4.170. We have that in sight now, and who knows, that could complete the fifth wave and spark a rally. I’m not betting on it, though.”

Commenting on the recent back and forth action, the broker noted that 15-cent swings were becoming pretty common. “It looks like we have some cold coming into the Northeast on Tuesday, but we’ll have to see what the market thinks about that,” he said. “I hope the market bottoms soon, but if it doesn’t, we’re looking at a price level down around $3.200. Looking at the charts right now, I would not buy this thing. We would need a breakout above $4.700 at least before I would even think about it.”

The brutal cold that pounded eastern markets last week is expected to dissipate. The National Weather Service (NWS) reported that for the week ending Feb. 7, New England, New York, New Jersey, Pennsylvania and the Midwest from Ohio to Wisconsin are expected to have one heating degree day (HDD) less than their normal accumulation. For the week ended Jan. 31, however, the region shivered under temperature anomalies that resulted in 138 HDD more than normal.

Some analysts contend that weather and heating requirements haven’t been a market issue for some time. “Even though recent forecasts have been calling for moderating temperatures, the weather ceased being a genuinely commanding factor in this market back on Dec. 13, when prices decisively broke beneath $5.21,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm. According to Beutel, more temperate conditions now “have the ability to push prices down even more. The market is weak enough to decline without moderating temperatures; if readings continue to warm over the next several weeks, as any look at a calendar would suggest likely, the bulls will then be fighting weaker economic conditions, contracting demand and a lack of heating needs.”

The 8:30 a.m. EST Monday release of a report on December personal income by the Commerce Department showed a 0.2% decline, up slightly from the 0.4% slide economists were expecting. Consumer spending dropped 1%, while expectations were for a 0.9% decline.

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