Following a topsy-turvey week, natural gas futures decided to give it a rest on Friday by trading within a 23 cent range and closing at $7.176, down 6 cents on the day. While Friday ended quietly for the prompt month, the week was somewhat more volatile. The December contract finished the week down 77.8 cents, which coincidentally makes for the second week in a row that December has fallen by 77 cents (see Daily GPI, Nov. 8).

The prompt month on Friday hit a ceiling at $7.38 around 11:00 a.m. (EST), before funneling lower in search of support. January and February futures, often referred to as the heart of winter, showed similar declines of 7.8 cents and 7.3 cents on Friday to settle at $7.866 and $7.916, respectively.

“Chart-wise, the weekly chart is going to look very bearish,” said Tom Saal of Commercial Brokerage Corp. in Miami. “We settled near the low of the week. That normally sets you up for a test of the low — $7.15 in this case — on Monday, if not in Access trading.” This week’s trading marked the third consecutive week-to-week loss for the December contract.

Looking at support lines, Saal said he doesn’t have anything till $7.00. On the upside, he pointed to the $7.75 level as continued resistance. “That $7.75 area would be significant if we ever got back above it.”

Saal noted that attention should continue to be paid to January and February futures because they have the highest prices. “For January, $8.34 is a very big number if we were able to get back above it,” he said. “Likewise, getting above $8.36 for February would also be important. These levels are obviously pretty high above us now, but we were there [last] Monday [Nov. 8]. This market can move real fast if it wants to.”

Saal said the extended stretch of falling prices could be attributed to the fact that winter-like temperatures have yet to impact much of the country. “I think we are probably going to continue to grind lower until ‘old man winter’ decides to show up,” he said. “The weather hasn’t happened yet — everybody knows that. During the winter, natural gas is a one dimensional market that takes its cues from the thermometer.”

The natural gas storage picture also continues to put bearish pressure on prices. On Wednesday, a larger than expected 34 Bcf gas storage injection was reported by the Energy Information Administration (EIA) for the week ended Nov. 5 (see Daily GPI, Nov. 11).

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