After dropping less than a nickel on Monday, April natural gas futures rebounded on Tuesday, but traders and analysts were quick to note that a sustained tally was unlikely. The prompt-month contract closed 13 cents higher on the day at $4.282.

The question of a bottom to the market remained a hot debate topic, with some saying the $3.916 low for the move from Friday could very well be it, while others still see the downside as vulnerable. Tom Saal and Ed Kennedy of Hencorp Becstone LC in Miami are not concerned with the absolute bottom, noting that current prices are more than attractive.

“With prices for the injection months below $5, it is a good time to lock in prices for all of the summer months,” the duo said in a note to clients.

Citi Futures Perspective analyst Tim Evans said he currently doesn’t see any fuel for an extended rally. “The natural gas market is once again probing the upside, but may still lack the full support that it needs in terms of consistent cool weather in order to build the bounce into a more sustained rally,” he said. “Temperatures will warm over the next few days, then cool off again for much of the U.S. going into the 11- to 15-day forecast period. This may help to prolong the heating season a bit, but demand for heating has to contend against the drop in industrial and electric power offtake that was more than 8% lower year-on-year in the latest January breakdown. Until we see evidence that the drop in drilling activity is beginning to translate into lower natural gas production, we’re hesitant to bet on much of a rally.”

Futures traders might want to take a look at the latest forecast of heating requirements, for if the current cold in the East is uncomfortable, all indications are that it won’t go away anytime soon.

For the week ending March 7 the National Weather Service forecasts above-normal accumulations of heating degree days (HDD) in populous energy markets. New England is expected to shiver under 269 HDD, or 36 more than normal, and New York, New Jersey and Pennsylvania are expected to receive 259 HDD, or 45 more than their normal tally. The Midwest from Ohio to Wisconsin is anticipated to experience 232 HDD, or six more than normal.

Attractive prices or not, others see still lower prices on the horizon. “We still feel that longer-term price lows have yet to be placed in this market,” said Jim Ritterbusch of Ritterbusch and Associates. In his view, next week’s cold may be “the last significant cold shot of the season with the associated draw on supply forcing only a minor adjustment to the season-ending supply trough that should be achieved in about four weeks.”

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