The two-day feel-good run by the bulls came to a crashing halt Wednesday as the March natural gas futures contract dropped 18 cents to go off the board at $4.056. April futures, which now take over as the front-month contract, subtracted 16.5 cents to close at $4.029.

After the March contract broke below $4 twice in the last four sessions, the downside door would still appear open for the April contract as storage inventories remain hefty, demand remains down and winter temperatures are running out of time.

Citing the recent up-and-down action, some market watchers were wondering whether the market is ready to return to its not-so-distant volatile past. “I don’t know exactly when, but it looks like a lot of shorts continued to roll into April,” said Tom Saal, a broker with Hencorp Becstone Futures LC. “It appears the April contract has a very high open interest figure, so maybe some fireworks will return to the natural gas futures market in the form of price volatility.”

Despite the rapid drop in prices of the last few months, Saal said the bulls have a ray of hope. “We have every winter month now behind us, with April being the first injection month. Even though it looks like we will come out of the winter with a lot of gas in storage, there will still be refill work to do. There will be injections, believe it or not. That demand is coming, but I don’t think it is currently reflected in the price right now. Looking at the April-November spread, you’ve got more than $1 there, so it would behoove a storage operator to buy April and sell November, locking in the storage spread to cover cost and risk. That would buoy the front-end of the curve.”

Addressing psychological support at the $4 level, Saal said long-term support also resides right around the number so it could be a little harder to crack. Despite the potential life jacket for bulls in the way of storage refill buying, the broker noted that the market could very well fall below $4 and stay there for some time. “If you think you’ve seen everything already, then just stay tuned,” he said. “The market has dropped pretty hard over the last few months, but it is hard to call a bottom. We could definitely get below $4 for a while.”

Economy bears received a setback Tuesday as petroleum and equity markets advanced, yet traders had to endure a highly negative report on consumer confidence. The Conference Board reported that February consumer confidence sank to its lowest level in 40 years, easily surpassing the negative expectations of economists. The index came in at a dismal reading of 25, far below the 35.5 the market was expecting and well below the January index of 37.4.

Weather forecasts call for an incursion of cold into the East and Midwest in the six- to 10-day period, but that doesn’t seem important either, according to Jim Ritterbusch of Ritterbusch and Associates. “We didn’t view the weather factor as a major driver of yesterday’s [Tuesday’s] approximate 3.5% price rally despite some shifts toward colder patterns within some of the six- to 10-day views,” he said.

Turning focus to Thursday morning’s natural gas storage report for the week ended Feb. 20, it appears that most estimates are looking for a withdrawal of just more than 100 Bcf, a steep departure from the previous report’s 24 Bcf draw, but still less than historical comparisons.

A Reuters survey of 22 industry players produced a 90 Bcf to 145 Bcf range of withdrawal estimates with the average pull expectation coming in at 108 Bcf. A draw of that caliber would still be significantly short of last year’s 157 Bcf draw and the five-year average pull of 145 Bcf.

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