Finding the sub-$6 level a little low for their liking, natural gas futures traders pushed the market higher in the overnight Access session and kept the momentum going through the regular trading session Tuesday.

March natural gas futures finished the day 19.5 cents higher at $6.164. The session was in stark contrast to Monday’s action, when the prompt month dropped below $6 to close at $5.969.

One theory for the jump higher Tuesday was the longer-term weather forecast from the National Weather Service. According to the NWS’ eight-to-14 day forecast released on Feb. 7, colder than normal temperatures were expected to once again grip the entire eastern U.S. During this time, the entire midsection of the country is expected to experience normal temperatures, while the Southwest sees above normal readings and the Northwest gets a little chilly. However, in its update on Tuesday, the NWS moderated its earlier forecast greatly.

“The natural gas market has turned higher, holding prices within their recent range on a light volume of buying,” said IFR Energy Services’ Tim Evans. “The prospect of cooler-than-normal temperatures two weeks ahead or more has put a modest degree of support back under prices, although we see plenty of downside risk associated with the uncertainty of projections that far forward.”

While cold might be on the horizon, this week’s weather forecast is definitely on the warm side. For the week ending Feb. 12, the NWS is forecasting fewer than normal heating degree days (HDD) in key gas consuming markets. The important lower Northeast states of New York, New Jersey, and Pennsylvania are forecast to receive 201 HDD, 54 below normal, and the industrial states of Wisconsin, Illinois, Indiana, Michigan and Ohio are anticipated to endure 228 HDD, 50 fewer than normally received in this week of the year.

The week’s tabulation of HDD shows that both the Mid-Atlantic and industrial Midwest are running below normal. When compared to the period 1971 to 2000 the Mid-Atlantic rate forecast would fall well short of its February average of 983 HDDs and the Midwest states would be over 100 HDD below an average February tally of 1,061 HDD.

Evans said he also sees this week’s storage report as another factor that will attempt to pull this market lower. “The DOE storage report for Thursday is a likely bearish event, even if our 120-140 Bcf projection proves to be on the low side,” he said. “It would take a draw in excess of 164 Bcf in order to take anything off the 273 Bcf year-on-five year average surplus from last week.”

Evans noted that while March was higher on the day, it is still consolidating inside of Monday’s $5.95-6.14 range. “We see more opposition scaling in just overhead at $6.20 and in conjunction with failed support at $6.28-6.30,” the analyst said. “Past that point, March may have a chance of challenging the $6.41 downtrend resistance or the $6.48 peak from last Wednesday’s trade.”

On the downside, Evans said the $5.95 support is closely backed by the $5.90 floor from Jan. 12, but any violation of that support risks a pickup in momentum that would put the $5.77 March low of Jan. 3 and the corresponding $5.71 spot low from that session at risk. “We see potential for a test of projected support at $5.10 or the 2003-4 lows at $4.39-4.52 under that scenario,” he said. “While the market has yet to fully establish a more robust downtrend, we think it is certainly at risk for a more substantial decline.”

Other analysts have said they are expecting further weakness. “The natural gas market is looking well positioned to remain below $6 especially with the oil markets in decline,” said Refco analyst Marshall Steves prior to Tuesday’s session. He pointed out that temperatures on the East Coast were expected to be mild through Friday and weather conditions following this week are expected to be variable. “I think expectations for this week’s EIA withdrawal will be below average, and looking forward, the withdrawal for this week is nothing to write home about either,” he said.

Steves suggested that the market could retest the $5.77 low made by the March futures in early January, and beyond that it became a question of “where the stop loss orders take you. It looks like there will be 1,300 Bcf at the end of March and at that point $6 natural gas will look pretty rich,” he added.

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