Although officially spring on the calendar, it was still winter Monday if you live in the upper Midwest, the Northeast, or trade natural gas futures.

Buoyed by another in a seemingly endless string of cold air blasts laden with precipitation, the natural gas futures market gapped higher Monday as short-term traders jumped at the opportunity to make a quick buck off a market that has been uncharacteristically stingy with its price moves of late. Short-covering, mostly by local traders who had gambled by going home for the weekend with net short positions, was also seen as a factor Monday. At 19.1 cents, Monday’s advance in May futures fell just short of the 20.3 cents it slipped all of last week. The prompt month closed at $5.134 in an active session that saw 72,547 contracts change hands.

Still recovering from the ice storm that knocked out power for thousands Friday, residents in upstate New York were bracing for another six or more inches of snow through Monday evening. And although accumulations were expected to be lighter in New York City, the threat of more of the white stuff was enough to convince locals traders to propel prices higher, sources agreed. “This is a short-covering rally in reaction to the weather in the Northeast — nothing else,” said Jay Levine of New Hampshire Advest Inc.

And although Levine can testify first hand as to the severity of this winter in New England, he is quick to point out that what we have seen over the past couple days is nothing more than a “remnant” of this winter. “While longer-term the risk is still to the upside, the window of opportunity — right now — is to the downside. This [market] is not ready to steadily trend higher…. not now, not yet,” he opined.

However, not all market-watchers share Levine’s short-term bearishness. Pointing to the sharply downsloping trendline that was broken by Monday’s rally, Craig Coberly of GSC Energy in Atlanta believes a low is in place. “A close above declining trendline [is] strong evidence that the decline is complete and that the trend has turned up,” he wrote in a daily note to customers Monday morning.

Simply settling above trend support, however, is not enough for Tom Saal of Commercial Brokerage Corp in Miami. To be convinced the market has turned, Saal would want to see the market develop and trade sideways above the $5.05 level.

Looking ahead, the market is anxious to see what if any effect the cooler temperatures at the end of last week had on the pace of storage injections. While some analysts such as Tim Evans of IFR Pegasus in New York see the potential for a 10-20 Bcf withdrawal, most predict another small refill.

Taking into account the 39-hour difference between the time survey periods of the degree day data released by the National Weather Service and the storage data released by the Energy Information Administration, Thomas Driscoll of Lehman Brothers in New York calculates that the market injected a hefty 35 Bcf last week. A figure of this magnitude, when compared to a 9 Bcf withdrawal a year ago and a five-year average injection of 14 Bcf, would be bearish.

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