After falling 20.3 cents on Wednesday and Thursday despite a winter freeze in a number of U.S. regions and a fairly bullish storage withdrawal, January natural gas futures continued the push on Friday by putting in a new low at $5.267 in afternoon trading before settling at $5.334, down 21.4 cents from Thursday’s finish and 15.4 cents lower than the previous week’s close.

The $5.334 finish marked a more than 15-month low for a front-month contract close. The last time prompt-month futures closed lower was back on Sept. 3, 2007 when futures closed at $5.321.

Even more history books had to be dusted off on the crude oil side, which saw the January contract put in a low of $32.40/bbl before closing Friday at $33.87/bbl, which marked an almost five-year low. The last time front-month crude futures closed lower was back during the first week of February 2004, when futures closed at $32.48/bbl.

More bad news appears to be on the way for natural gas bulls, who may face an uphill battle during the last week of December and into January. The National Weather Service (NWS) in its six- to 10-day forecast calls for above-normal temperatures across a broad swath of the south-central United States. South of a sinuous arc stretching from western Arizona to southern Wyoming to southernmost Illinois to central Virginia is expected to have above-normal temperatures. New England, along with the northern Great Plains, Pacific Northwest and coastal California, are all expected to have below-normal temperatures. The remainder of the country is expected to see normal temperatures.

Analysts saw further market weakening coming. “All in all, this market remains trapped in a sideways pattern between about the $5.45 and $5.85 levels that has been intact since the beginning of last week,” Jim Ritterbusch of Ritterbusch and Associates said Friday morning. He added that he expected an “eventual breakout” lower as the Dec. 29 expiration of the January contract approaches. “In other words, a sell-rallies approach is currently favored with emphasis on the February contract. Any advances toward the $6 mark would provide fresh [selling] opportunities in our opinion.”

Some risk managers were warning that higher prices could be on the horizon. “End-users should be locking in prices for winter at current prices using futures or options,” said Ed Kennedy and Tom Saal of Hencorp Futures in Miami.

Bulls are also ready, albeit at lower prices. Phil Flynn of Alaron says to “buy January natural gas at $5.10 — stop $4.70.”

Barclays Capital analysts said it appears that most commodity markets are heading into a “holiday hibernation” as traders are wrapping up their end-of-year business earlier than normal this year. “2008 has been a challenging year no doubt, and an exceptionally difficult one for investors,” the analysts said in a research note. “Traders are likely to be happy to see the back of it and activity levels, already low in many markets, are dwindling rapidly — much earlier than usual — ahead of the holiday period. With risk now pared back to very low levels, price volatility is also easing.”

The analysts noted that the effects of production and output cutbacks have yet to trickle through to energy markets. “The sizeable output cuts in energy and industrial markets are still to have much impact on market sentiment, but perhaps that is not surprising given that inventories are still rising and demand expectations are being revised down,” they said. “In the middle and latter stages of recession, energy and base metals markets tend to underperform; and gold, agriculture and livestock tend to outperform other commodities.”

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