With many traders heading for the holiday weekend early, the natural gas futures screen on Wednesday was quiet, with the prompt month trading within a 20-cent range for the entire session. After reaching a low of $6.73, January natural gas settled at $6.82, a 3.6-cent decline on the day.

Natural gas was helped lower by weakness in the petroleum complex, which was sparked by bearish inventory reports. February crude settled down $1.52 at $44.24/bbl, while January heating oil lost 4.09 cents on the day to settle at $1.3585/gallon.

The running joke among brokers is that the toughest thing about this market is deciding what to read in between trades coming in, a Washington, DC-based broker said. “Its been pretty quiet. A lot of the brokers on the Nymex floor have said that people have already closed their books on January. With 28,901 in open interest on Wednesday with three days left to go for January…that is by no means a large number.”

The broker noted that natural gas was definitely influenced by bearish numbers for the liquids. “Now we will see how we end up going into the long holiday weekend,” she said, adding that “there is a tendency at least with liquids for short-covering going into a long weekend.

“I think we will end up lower going into the weekend. The storage report Thursday morning sounds like it will reveal a pretty darn bearish number. I think we might push down lower on the number or even before it on the sell-the-rumor and buy-the-fact theory. I am a bear overall. Unless there are some massive changes in the weather forecast, I think there is still some weakness in the January contract left before it goes off the board.”

Advest Inc.’s Jay Levine said he sees January expiring in a much different fashion than December did. “Given thinning holiday markets and last month’s bizarre Dec. settlement, next Tuesday’s affair will be a non-event,” he said.

Looking ahead, Levine noted that anything can happen. “We may be fundamentally bearish now, but the likelihood of something going ‘wrong’, and prices spiking, is much more likely than anything and everything going ‘right’ and prices dropping,” he said. “But collapsing — as in $4 NatGas and $20-something Crude — I doubt it.”

Levine added that even if prices did collapse, which he does not expect, it won’t be for long. “Of course the way these markets tend to overreact, any exaggeration is possible in either direction so a selling capitulation, as with a buying climax, is possible.”

For January support, Levine said he sees $6.60, followed by $6.35 and $6.05. On the flip side, he sees resistance at $7.05, followed by $7.55 and $8.05.

Thursday morning’s Energy Information Administration (EIA) natural gas storage report for the week ended Dec.17 will be compared to last year’s 151 Bcf pull and the five-year-average withdrawal of 122 Bcf. ICAP’s storage options auction on Wednesday revealed an implied market forecast of a 114 Bcf withdrawal, 1 Bcf short of the projection put out by the Reuters industry survey.

Acknowledging that he is clearly on the low side of industry projections, Levine said he is looking for a 92 Bcf pull.

In observance of the Christmas Holiday, Nymex announced that it will close at 1 p.m. (EST) on Thursday. In addition, the exchange will also be shuttered on Friday.

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