March natural gas futures managed to climb into the plus column Wednesday in its last trading day following four consecutive days of losses.

The expired March natural gas futures made it into positive territory amid estimates of Thursday’s Energy Information Administration inventory report expected to show much heavier withdrawals relative to historical averages. The market was also able to fend off a negative report on new home sales. At the closing bell March natural gas futures rose 3.8 cents to $4.816 and April added 5.0 cents to $4.859. April crude oil gained $1.14 to $80.00/bbl on supportive remarks by Fed Chairman Ben Bernanke.

Wednesday’s advance was the first since a week ago, and analysts see the market’s oversold condition as reason to favor the long side. “Given our view that a lot of bad or bearish news has been discounted via the price plunge of some 50 cents during the past week, we feel that any bullish surprises will pack more punch than any bearish figures despite the current downward price momentum,” said Jim Ritterbusch of Ritterbusch and Associates. Ritterbusch favors the idea of accumulating long positions in the second quarter contracts on pullbacks in April futures into the $4.70-4.80 zone in anticipation of an eventual return to a $5 handle.

The market was also able to deflect negative economic data in the form of new home sales. The Commerce Dept. reported that January new home sales were a paltry 309,000 units, well below expectations of 360,000 and December’s 342,000 units. January 2010 sales were equal to January 2009 sales; thus new home sales have failed to exhibit any economic strength capable of lifting the economy out of its current slump.

Bulls hoping to see positive price momentum carry forward Thursday will be turning their attention to the 10:30 a.m. EST release of weekly inventory figures. Last year 90 Bcf was withdrawn from storage reservoirs and the five-year average stands at 124 Bcf. The 2,025 Bcf currently in storage represents a modest surplus to year-ago and five-year averages, but that is likely to change with the release of Thursday’s figures.

A Bloomberg survey of 19 analysts revealed a median expectation of a 169 Bcf withdrawal, and a Reuters poll of 28 analysts showed a 169 Bcf withdrawal as well. Kyle Cooper of IAF Advisors in Houston estimates a 173 Bcf pull and industry consultant Bentek Energy using its North American flow model estimates a draw of 171 Bcf. Bentek predicts a withdrawal of 95 Bcf from the East Region, 65 Bcf from the Producing Region and 11 Bcf from the West Region.

Thursday’s anticipated hefty surplus-busting inventory reduction notwithstanding, analysts taking a broad look at the natural gas market are not optimistic that prices will advance. “Natural gas has been pressured by the fact that there is a tremendous amount of gas that has been found over the past couple of years and that can be delivered to the market,” said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm. DeVooght believes that cold weather notwithstanding, natural gas demand remains “stagnant.” DeVooght sees the petroleum complex retaining price support from overseas economies that are expected to improve, but the gas market is not so fortunate. “The combination of more-than-adequate supplies and weak demand because of a slow U.S. economy does not bode well for the gas market. On a trading basis, we will hold current positions,” he said.

DeVooght counsels trading accounts and end-users to stand aside, but producers and those vulnerable to price declines should continue to hold the remainder of a 12-month $5-8 collar initiated in August at a cost of 35 cents as well as a 12-month $5.50 put option combined with the sale of a $7.50 call that began in December.

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