Failing to make up their mind on direction Tuesday, traders pushed February natural gas to a low on the day of $6.245 as of 11:30 a.m. (EST) before changing directions to explore higher.

After tapping out at a high of $6.48 late in the session, the prompt month sold off into the close to settle at $6.403, down 7.3 cents on the day. March futures declined 7.2 cents to settle at $6.444.

“I don’t know how much of this little sell-off at the end had the flavor of the locals bailing out at the end of the day, but the bigger picture is that since Jan. 3, we really haven’t broken the uptrend here,” a Washington, DC-based broker said. “There has been a nice sort of sustained basing and a gradual moving up. We haven’t really had a significant test back down to that $5.71 level.”

Noting that some of the moving average indicators he follows have crossed over to a more bullish stance, the broker said the sustained downtrend from Halloween through New Year’s appears to have finally “lost its oomph.”

From a bigger fundamental point of view, the broker said there is an issue of whether the market believes that the storage surplus is enough for the gas-dependent economy the U.S. now has. “That applies to summer demand as well as winter demand. I think among some of the bigger structural issues, the natural gas trading world has to look at the stranded nature of gas and the fact that we can’t currently move it around globally,” he said. “In addition, natural gas trading also has to take into account the size of the current gas consuming economy. All these things sometimes make storage the number we look at because we can measure it and count it, but you have to realize that in fact, it is just a very small piece in the much larger economic picture.”

Commenting on the moderating weather forecasts that have been recently released, the broker said that despite all of this bearish news out in the market, natural gas futures haven’t cratered. “All these stories are out there about weather not being all that much and yet we haven’t really seen an attempt to flush down to $5.71 yet.”

Looking towards Thursday’s storage report, the broker said he is expecting it to reveal a sizeable withdrawal. “Obviously we know that last week was cold and I think we will get a little bit of a clue as to what the natural gas storage report will be from the liquids report Wednesday. I’ve heard the 200 Bcf withdrawal number being tossed around and I think the potential for a big withdrawal has already been factored a little bit into the current natural gas futures price.”

The implied market forecast for ICAP’s storage options auction is for a 225 Bcf withdrawal for the week ended Jan. 21. The online auction will run at its normal time Wednesday from 3 to 4 p.m. (EST).

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