Traders on Wednesday added more fuel to the range-bound trading argument as March natural gas futures traded in a fairly slim 18.7-cent range during the regular session between $4.533 and $4.720. The prompt-month contract ended up closing at $4.597, up 8.4 cents from Tuesday’s regular session finish.

While most traders can agree that the current market is range-bound, the debate of whether or not Monday’s $4.280 low is in fact the bottom of the move remains hotly contested. Some believe all of the bearish indicators were long ago factored into prices while others think the other shoe has yet to drop.

“This market is obviously treading water. We are definitely seeing sideways movement. Over the past week or so we have been hovering around the $4.500 area, plus or minus a dime or two,” said Tom Saal, a broker with Hencorp Becstone Futures LC in Miami. “We’ve identified the $4.600 area as a big price level historically for natural gas. That $4.600 price was the high for almost the entire 1990s. Now that we have been trading above it for most of this decade it is proving so far to be somewhat of a support area.”

Saal said it is tough in this market to say whether the low for the move is in, but “if you put a gun to my head I’d have to say, ‘Yeah.’ I think a lot of the bearish factors we have been seeing are already in this market. The economy is no surprise to anyone at this point. Demand has been curtailed and supply is up due to the drilling boom of the last year or so. None of this is new and a lot of that has been factored in. In case no one has noticed, gas is trading at nearly a $10/Mcf deficit to where it was last summer. We could continue to fall because anything is possible, but we’ve already seen quite a drop, so who knows if anything is left?”

The broker said he is watching the funds pretty closely for movement. “We are keeping our eye on the funds right now because they are very net short natural gas. I think sooner or later we are going to get a pretty healthy short-covering rally because the funds often move together.”

Looking at the Energy Information Administration’s (EIA) natural gas storage report for the week ended Jan. 30, most industry estimates are abnormally centralized. A Reuters survey of 23 industry players produced a range of withdrawal expectations from 155 Bcf to 221 Bcf with an average expectation of a 190 Bcf draw. Research and analysis firm Bentek Energy said its flow model is also indicating a 190 Bcf pull, which would bring stocks 12.2% below the five-year high and 1% above the five-year average. Bentek said it expects 128 Bcf to be removed from the East region while the Producing and West regions draw 43 Bcf and 19 Bcf, respectively.

“I think a 190 Bcf draw would be pretty reasonable considering all of the circumstances,” Saal said. “If we realize a withdrawal of 190 Bcf, I think it certainly highlights the demand slippage that everyone is talking about. With the weather we have had, we would have seen a draw of well over 200 Bcf a couple of years ago.”

The number that will be revealed Thursday morning at 10:30 a.m. EST will be compared to the 221 Bcf draw for last year’s week and the 183 Bcf five-year average pull.

Others are not so sure futures have fallen low enough, noting that all of the bearish factors might not yet be factored into the price. Some top analysts are on the lookout for lower prices driven by plump inventories. “On balance, we remain of the opinion that fresh lows will be forthcoming, and despite some possible bullish shifts in the temperature patterns beyond next week, we expect the upcoming warm-up to offset any occasional supportive economic news,” said Jim Ritterbusch of Ritterbusch and Associates. Ritterbusch contends that recent weather forecasts show temperatures in his area of northern Illinois approaching 50 degrees through the first of next week, and such temperature patterns will “equate to an unusually small storage withdrawal within the EIA data scheduled for release on Feb.19. This anticipated acceleration in the building supply surplus has not yet been fully discounted within the futures, in our opinion.”

Economy watchers got another dose of bad news Tuesday afternoon. The Commerce Department reported motor vehicle sales that were well below expectations. January sales were at annual rate of 6.8 million units, well below expectations of 7.7 million. Sales had inched up from November’s 7.5 million rate to 7.7 million in December, but those figures pale in comparison to annual sales of about 12 million tallied a year ago.

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