In concert with a one-two combination of bullish private and governmental weather forecasts, the natural gas futures market spiked briefly above the $7.50 mark Wednesday as non-commercial fund traders reversed to the long side of the market. As it turned out, that may have been an expensive decision because prices tumbled Wednesday afternoon nearly as quickly as they had risen.

The focal point for the price action was the January contract, which dipped just below unchanged to close at $6.711. By comparison, each of the out months notched a modest gain, led by the March contract, which advanced 13.3 cents to finish at $6.391.

Although technical factors have been at the foundation of the market’s recent advance, weather forecasters did their part Wednesday. In a reversal of its recent string of predictions for mild weather, the National Weather Service now calls for below-normal temperatures across the a majority of the East Coast for the Dec. 17-23 timeframe.

However, the government is not the only one predicting another blast of Arctic air. Also on the record for cold temperatures is Pennsylvania-based Accuweather, with forecasts for an invasion of below-normal temperatures in the eastern half of the nation for the final third of the month, sources said.

While those forecasts are certainly supportive of higher gas prices, traders wonder whether they can support $7.00+ gas prices. “The move [Wednesday] morning was way overdone,” said Steve Blair of Rafferty Technical Research in New York. “We ran up but came off just as hard,” he continued pointing to a similar move in the nearby crude oil markets.

Looking ahead, the market will take its next clue from updated storage data due out Thursday at 10:30 a.m. ET. Market participants are forming a consensus around a 96-110 Bcf withdrawal. If realized, a number of that magnitude would be open to interpretation. While it would easily eclipse last week’s 59 Bcf announcement and the five-year average draw of 73 Bcf, it would fall short of last year’s whopping 162 Bcf takeaway.

Tim Evans of IFR Pegasus in New York senses the tide may be shifting back in favor of market bears. “The drop back from $7.55 certainly implies some fairly serious resistance there and it won’t be easy for the market to just zip past that target now, even with some fairly supportive storage numbers or weather forecasts,” he wrote in a note to customers Wednesday night. “This peak also represents a ‘throw-over’ or short-term violation of longer-term channel resistance on the weekly spot continuation chart, another indication of possible exhaustion [to the upside].”

In daily technicals Blair targets major resistance at the $7.70 level. On the downside, he sees minor support at $6.665 and $6.50. Major support exists at the $6.25 mark.

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