The natural gas futures market kicked off 2002 on Wednesday in much of the same way it concluded 2001 — by funneling to new lows amid undeniably bearish fundamentals. Traders didn’t need the release of fresh storage data (pushed back until today at 2 p.m. EST) to tell them that supplies are plentiful. Meanwhile, the downtrend remains intact and the current spate of cold weather is showing signs of moderating. The February contract took the news squarely on the chin, tumbling 10.5 cents to close at $2.465.

Despite the almost 5% price decline, several traders were somewhat optimistic of a rebound to close out the week. After gapping lower at the opening bell and plummeting to a new 32-month low at $2.43, the February contract stabilized for the rest of the session and actually turned higher just ahead of the closing bell.

According to Jay Levine of Advest Inc., the market may be ripe for a little bounce. “Although we are in the middle of a downtrend channel, I’d advise traders (especially end-users), to begin establishing light long hedges. As fundamentally bearish as this thing is, the timing and the current price level is not quite right,” he reasoned. That being said, Levine looks for the market to fill in yesterday’s chart gap up to $2.545 possibly as early as the overnight Access trading session. He views support at $2.44-47, followed by more buying expected in the $2.37-41 area. Resistance, meanwhile, exists at $2.52-55 and $2.62-65.

Looking ahead at today’s storage report, traders and market watchers expect a withdrawal of 120-150 Bcf, which if realized, would fall well short of last year’s whopping 209 Bcf takeaway. Citing degree day heating figures for last week that were 14 less than previously forecast, Thomas Driscoll of New York-based Lehman Brothers has ratcheted his estimate down to 150 Bcf from 170 Bcf. Further out on the horizon, he predicts next week’s report will show a withdrawal of 180 Bcf compared with last year’s drawdown of 167 Bcf.

Storage is currently 90% full at 2,980 Bcf, 1,042 Bcf more than at this time last year and 593 Bcf more than the five-year average. The AGA decided to push back its weekly report until Thursday both last week and this week to give it more time following the holidays to survey and compile the data.

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