Following their brief trip below $4 late last week, March natural gas futures rebounded on Monday to record a high of $4.159 before closing at $4.097, up 9.1 cents from Friday’s finish. With many in the industry currently believing gas with a three at the front of the price might be too low, Monday’s rebound was likely sparked by price level expectations as opposed to any turnaround in fundamentals.

Rafferty Technical Research broker Steve Blair said there is a certain kind of “stigma” attached to even-dollar levels and that they become even harder to break as prices get to the high side or low side of the trading range of the last year or so.

“The $4 level, give or take a nickel, seems to hold some pretty good support,” Blair said. “It looks like the market is finding some pretty decent support.”

Addressing the 9-cent increase Monday, Blair said it wasn’t a result of any fundamental shift. “After the measly 24 Bcf draw storage report last week reported for the week ended Feb. 13, it is hard to say that things are turning bullish. Current inventories are way ahead of year-ago and five-year average storage numbers. We are ahead of last year and we had some pretty hefty storage levels back then, so it is obvious that supplies are not an issue at this point. Unless something changes dramatically over the next few weeks, it is not likely that we will finish the withdrawal season below last year. We are going to start the refill season with a good head start, unless we get a really hot summer.”

Noting that some people within the industry were ready to call last week’s $3.921 low a bottom, Blair said he was more than hesitant to make that call. “People have been calling a bottom all of the way down the last few months, but if we get a few more weeks of minor withdrawals, then even lower prices could be in the cards,” he said. “As long as this market doesn’t bounce in any big way between now and Thursday, I think this market has great potential of another breach of the $4 level if the storage report withdrawal comes in low again.”

At least one analyst has said that prices could be driven down into the $2 area if events line up just right this summer (see related story).

Other brokers, who are looking at historical patterns, said most signs point to a market that is running out of real estate to the downside. Some technical traders see market conditions in place similar to those of historical market lows. Tom Saal of Hencorp Becstone LC in Miami plotted monthly price data back to 1992 alongside stochastic indicators that measure market oversold/overbought conditions. According to Saal’s analysis, present stochastic readings, under 25, are similar to market bottoms observed in mid 1997, early 1999, early 2002, early 2004 and late 2006. Saal identified long-term chart support at $3.700, but those interested in establishing a market position at what may be a historic low might not want to wait. “Buyers be ready. Use call options,” he said Monday morning.

Others are less concerned with a historical low than with what they see as major technical damage. “Technically, we had an important breakdown on the charts last week. Prices settled below the previous low at $4.070 on Thursday and Friday, giving us a clear breakdown,” said Peter Beutel, president of Connecticut-based energy consulting firm Cameron Hanover. According to Beutel, Friday’s weakness placed prices at their lowest level since Nov. 15, 2002, but technically the trouble started on Jan.13, when natural gas prices broke below then-major support at $5.210 (established on Dec. 22).

Last week’s break below $4.070 (the low since Sept. 27, 2006) was something of a long-term process, he said, adding that after prices broke below support at $5.210, subsequent comparisons were all made to the market low of Sept. 27.

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