In a discharge of pent-up selling that had welled up over the holiday weekend, natural gas futures tumbled lower Tuesday in sympathy with the latest round of bearish weather forecasts. Lower prices in the Monday-night Access trading session set the stage and the market responded by gapping lower when regular-outcry trading resumed Tuesday morning.

A midday rally failed to gain much bullish acceptance and the March contract closed in the bottom half of its trading range, down 21.7 cents at $5.319.

Market watchers agreed that the latest round of mild weather forecasts were at the heart of the sell-off Tuesday. Above normal temperatures are now forecast for a large swath of the U.S. for the end of February, according to the latest National Weather Service outlook. Specifically, the Tuesday afternoon report called for warmer-than-seasonal readings from Seattle to Key West and from South Texas to the Great Lakes. The notable exceptions to this area of warm weather are the Northeast, which is expected to see normal temperatures, and the Southwest, which could see below-normal mercury readings.

The forecasts created a bit of a whip-saw effect for the natural gas futures market Tuesday. Prices had risen last Friday on the shaky presumption that the weather outlooks this week might call for below normal temperatures for the end of the month. With those fears diminished Tuesday, the market was able to quickly correct lower, sources agreed.

Looking ahead, market watchers note that the latest forecasts may continue to divert attention from the cold weather of last week. “With warmer than normal temperatures expected for most of the continental U.S. next week, especially in key Midwest markets, the market will be more able to skate past the next round of DOE storage data,” said Tim Evans of IFR Pegasus in New York.

And while he notes that heating degree day accumulations for last week suggest a withdrawal in the 150-170 Bcf range, Evans is quick to point out how a figure of that magnitude would fall bearishly short of the 236 Bcf and 224 Bcf draws of the previous two weeks as well as the year-ago analog of 203 Bcf. Other expectations ahead of Thursday’s report call for a 150-178 Bcf takeaway.

In daily technicals, the charts suffered some damage in conjunction with Tuesday’s sell-off. The March contract failed not only to hold above, but also to settle above key support at $5.35. Other than Fibonacci retracement support at $5.26 (75% retracement of $5.16-$5.63 move), the market has little with which to thwart further selling down to last week’s lows at $5.16. A break there could lead to a decline down to the $4.92-$5.00 area.

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