With little in the way of fresh fundamental or technical influence to provide direction, the natural gas futures market took the path of least resistance Wednesday in extending to new nine-week lows. Although the series of lower lows and lower highs on the daily bar chart is a very real concern for bulls, they were impressed by the market’s ability to rebound off its mid-morning lows. A intense, albeit brief, sell-off in the afternoon sent prices back beneath the $5.00 mark, but that, too, became a buying opportunity. The May contract finished at $5.065, down 6 cents for the day, but up 13.5 cents from its $4.93 low.

Natural gas traders were quick to point to crude oil futures, which lost more than 4% of their value Wednesday as a reason for the early downward thrust. May crude finished at $28.56, down $1.22 on reports the U.S led coalition had gained ground toward Baghdad. However, just as on other trips below the psychologically important $5.00 level, the natural gas market quickly rebounded on the wings of bargain-conscious buyers.

Although some traders are growing weary of the market’s recent trading range, others are prepared to wait out the market as it consolidates here in the low to mid $5.00 range. Patience might be a valuable trait to have, concludes Tom Saal of Commercial Brokerage Corp. who points to the last time the market was coming down off of a major spike. Saal notes that following the rally to $10.10 in December of 2000, the natural gas futures market settled back in the low to mid $5.00 range for a 10-week period from mid February to late April before continuing lower. “Its not like we haven’t seen this before,” he said.

While the market eventually broke decisively lower in April of 2001, plumbing to $1.76 in late September of that year, market watchers are not ready to bet too heavily on a repeat of that performance. Instead, traders and analysts are waiting until a clearer fundamental picture develops.

All eyes will be focused on updated supply data available from the Energy Information Administration Thursday at 10:30 a.m. EST. Market estimates call for an injection of roughly 20 Bcf, which would not only be in bearish contrast to the year-ago report featuring a 61 Bcf withdrawal, but would also exceed last week’s 7 Bcf refill. As of March 21, gas in underground storage facilities stood at 643 Bcf, just above its all-time low of 636 notched the week before. Because of the low level of stocks at the beginning of the season, the market can suffer some price negative week-on-week comparisons without putting much of a dent in the year-on-year deficit, which as of March 21 stood at 918 Bcf.

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