Ending a five-session string of advances, the natural gas futures market turned lower Wednesday as traders lightened their long positions in sympathy with losses in the nearby crude oil pit and ahead of the release of fresh gas storage data Thursday. And while bears were undoubtedly awakened by April’s 19-cents sell-off and $5.375 settlement, the bulls fully expect nearby support to hold and provide the market with a springboard to higher levels.

Pressured by a the surprising news that U.S. oil stocks increased by 2 million barrels last week, crude oil futures tumbled lower Wednesday. The April contract dropped 86 cents to close at $35.80 after having peaked Monday at nearly $37.

For Jay Levine of New Hampshire-based Advest, the bearish stock news may be a sign of things to come. “[Wednesday’s] little surprise (API/DOE builds) is [a] small — but perhaps telling — notch, suggesting more weakness to come…Whether or not [natural gas] suffers the same weakness will immediately be based on tomorrow’s number.

“My guess for [Thursday’s] EIA storage number is for a lower-than-most [expectations] 96 Bcf withdrawal. That doesn’t mean I’m bearish…but it does mean I have a feeling that the recent ebullience has gotten a bit carried away. This market’s far from over, but when I see prices advance largely based on a perceived shift in psychology — a quick flip — it causes me to contemplate my positions and trades a little more carefully,” Levine wrote in a note to clients Wednesday.

On the other side of the storage-expectations fence sits Tim Evans of IFR Pegasus in New York, whose 140-150 Bcf withdrawal expectation easily exceeds the common range of predictions centered in the 110-120 Bcf area. “On the bullish side of the ledger, storage data on Thursday is likely to show a 140-150 Bcf decline, outpacing the 109 Bcf five-year average rate, although not the 176 Bcf draw from a year ago,” he said.

And while he notes that the mild weather forecasts do not favor the bulls, Evans remains cautiously optimistic that higher prices are likely. “On a net basis, we think the market may be entering an intermediate-term uptrend phase, but not necessarily one that will soar indefinitely at the rate of the past week.”

That being said, Evans looks for support at Wednesday’s low in the mid- $5.30s to hold, preventing a further decline to Monday’s $5.26 mark. On the upside, Evans notes that the recent $5.60 peak now takes on greater significance as an interim top by virtue of Wednesday’s decline. Previous support at $5.48-485 now serves as the first pivotal point to the upside.

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