Caught between the bullish euphoria surrounding gains in the nearby crude oil pit and the bearish reality of its own short-term fundamentals, the natural gas futures market shuffled quietly sideways Friday. On the technical side of the market the bag was similarly mixed as Friday’s closing prices rang bearish on the daily chart, but bullish on the weekly chart.

At $5.443, the April contract was down 1.4 cents for the session, and up 2.7 cents for the week. An estimated volume Friday of just 54,462 contracts was confirmation of the listless trading activity.

With little good news in their own market, natural gas bulls were forced to take their price clues from the nearby crude oil market Friday. Buoyed by continued civil unrest in Venezuela and renewed concerns about that nation’s ability to make future deliveries, the crude oil market spiked to new, 12-month highs Friday. By gaining 62 cents to close at $37.26, the April contract rose to levels not seen since before the war in Iraq.

However, the natural gas market is not affected by the same geo-political factors and was left to sulk lower in its own bearish short-term outlook. “The non-supportive 96 Bcf in net withdrawals in DOE storage for [the previous] week and the relatively mild current and forecast temperatures suggest to us that prices may be consigned to a more extensive period of technical base building over the next few weeks, rather than the smooth transition to a seasonal uptrend that we previously though might be possible,” noted Tim Evans of IFR Pegasus in New York.

“The weather could always change, and recent forecasts have had a low confidence level ascribed to them due to differences between models, but without some prospect of stronger heating demand we think the market will be hard pressed to construct an uptrend,” he wrote in a note to customers Friday.

However, the medium-range outlook remains favorable for bulls, chips in Craig Coberly of GSC Energy in Atlanta. “All in all, gas’s price performance [Thursday] was technically nearly ideal. On the heels of a ‘bearish’ EIA report, gas declined and completed a Fibonacci 61.8% retracement of the recent rally….This price action strongly supports our intermediate-term bullish outlook.”

That bullishness received what might be viewed as a bit of validation Friday afternoon with the release of the weekly Commitments of Traders data. According to the CFTC, non-commercial speculative accounts were busy buyers during the week ending March 2 as they reduced their net short positions from 28,041 to 14,396. And while it is far from a sure thing, the behavior of the non-commercial sector has historically been a decent prognostication of price trends.

“The outlook has changed dramatically over the past couple weeks,” a Washington DC-based broker explained. “Even though the move from $6.00 to $5.10 does not fit with most people’s expectations of a move to [a late winter] low, it may be all that the bears are going to get this year. We have skated by the with mild summers the last few years and now there is all this talk about revisions to reserve replacements by majors,” he said noting that just about the only thing bearish out there is the level of storage heading into the refill season.

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