Bullied by follow-through buying on the heels of last week’s supportive storage release, the natural gas futures market opened higher Friday and rose quickly to test key resistance near the $6 mark. However, the gains were short-lived as market-watchers were hit with weather forecasts confirming the belief that the second half of the month would be much warmer than the first half.

March finished the week at $5.536, up 8.5 cents for the session but nearly a dime off its early top. At 53,745, estimated volume was light, suggesting traders did little more than even out their positions ahead of the holiday weekend.

According to the Energy Information Administration, storage supplies were 1,603 Bcf as of Feb. 6, down 224 Bcf from the week prior and 38 Bcf below the five-year average. Versus expectations, the storage figure was a bull’s dream as it easily surpassed the year-ago draw of 150 Bcf, as well as the five-year average takeaway of 127 Bcf. Estimates had only called for a 180-205 Bcf draw.

And while impressed by the 236 Bcf and 224 Bcf draws in successive weeks, market watchers admit the storage outlook going forward is not too rosy for the bulls. “Due to the recent two large withdrawals, it does certainly look as though inventories will drop below 1,000 Bcf by the end of March,” said Citigroup analyst Kyle Cooper. “However, even from a level as low as 800 Bcf, storage capacity would be strained [by the end of the summer] if injections matched last year.” In the near term, Cooper calls for a withdrawal report Thursday in the 150-160 Bcf range, which would fall neatly between last year’s 203 Bcf withdrawal and the five-year average takeaway of 114 Bcf.

But even armed with the hopes of a relatively hefty storage report later this week, bulls will have a difficult time pushing past the expected moderation in temperatures. Though previous forecasts have hinted that warmer weather was headed our way, they did not call for the large-scale warm-up featured in forecasts Friday.

According to the latest six- to 10-day and eight- to 14-day forecasts by the National Weather Service, above normal temperatures are predicted for a large swath of the country through at least Feb. 27. In fact, the only areas of the country expected to see below normal mercury readings during that time frame are the state of Florida and the Rocky Mountains.

Following the gains of the past week, technicals have turned from undeniably bearish to somewhat mixed. By etching a high above $5.60 Friday, the March contract tested the first of several layers of key overhead resistance. Selling is likely at $5.66 and $5.79 ahead of the $5.90 prompt-month peak from Jan. 28. To capitalize on a move through these levels, Tim Evans of IFR Pegasus in New York is cautiously endorsing a long position. Should the market prove him wrong, a sell-stop placed at $5.33 would cut his losses.

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