Traders appeared to take Friday off for the most part as April natural gas futures managed a slim 22-cent range with no significant pushes in either direction, lending credibility to the theory that the market is comfortable just where it is right now. Prompt-month natural gas ended up settling at $6.790, up 3 cents from Thursday but 52.3 cents lower than the previous Friday’s close.

After putting in a low for the day at $6.610 in morning trade, April natural gas meandered its way higher to record the day’s high of $6.830 just after 1 p.m. EST. However, the lack of support behind either move kept the day a wash.

“Things were really quiet Friday,” said Steve Blair, a broker with Rafferty Technical Research in New York. “The guys I talked to on the floor said there wasn’t a whole lot going on. We got down near the lows and bounced but ended up quiet for the rest of the day.”

With the heating season mostly written off, Blair said the market is soon going to be focusing on the injection season, which brings new questions. “The industry has to wonder if the mild winter will translate into an early beginning to summer,” he said. “That could be the next spark before the hurricane season starts. If we have really warm temperatures this spring, which brings the need for AC load in the Northeast or the Midcontinent, prices could jump higher.

“The market at this point has successfully reacted to the greater storage picture. I think the market is very comfortable at these price levels between $6.00 to $7.00. At this point, I would be more surprised to see the market break below $6 than I would be to see it move to the upside,” Blair said.

The Energy Information Administration (EIA) reported Thursday that withdrawals from working gas storage for the week ended Feb. 24 reached 171 Bcf, well above market expectations. Most of the industry’s expectations hovered approximately 10 to 20 Bcf below the actual pull for the week.

After the report came out Thursday, April futures scooted to the highs of the day at $6.920 but overall response by locals was relatively tame. “After the EIA number came out, it was pretty quiet, and I don’t think too many of the locals had much in the way of a position on when the storage figure was released,” said a New York floor trader.

Longer term analysts discounted the market impact of the large withdrawal as well. “The bottom line is we’re 48% above the five-year average on storage,” said Carl Neill, an analyst with Risk Management Inc. in Chicago. “In the grand scheme of things, [Thursday’s] supply report isn’t a big mover,” he said.

Current inventories stand at 1,972 Bcf with one month left in the heating season and are on track to exceed the 1,500 Bcf that March 2002 ended with, which is currently the highest March-ending storage level of the last 12 years. There may be some withdrawals over the next few weeks simply because some storage contracts require that certain levels be reached by the end of the heating season. Those withdrawals would simply decrease the amount of current production that can be sold.

The high inventories have some analysts expecting continued price erosion. “Additional declines in the April contract appear likely with the $6.40 area still providing a near term downside possibility. We still suggest holding any existing shorts,” said Jim Ritterbusch of Ritterbusch and Associates. He noted that an eventual fall to $6.00 “can’t be ruled out.”

Technicians, however, see an oversold market ready to advance. Tom Saal of Commercial Brokerage in Miami said that natural gas futures exhibit a “textbook bottoming pattern.” He cites a bullish divergence between momentum studies and price action, which often leads to a market advance. Such a divergence results when the price momentum data — the rate of change of prices — is positive and the near term direction of prices is sideways to lower.

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