Amid continued non-commercial short covering, natural gas futures worked their way higher Tuesday morning, only to fall late in the session as trade and local accounts took profits ahead of today’s release of fresh storage data. At the closing bell the April contract was 2.1 cents weaker on the day at $2.467.

Yesterday’s price action drew mixed reviews from technical traders. While the early push to $2.535 was positive, because it represented a new, two-month high; it was also disappointing, because it fell short of the Dec. 31-Jan. 2 chart gap up to $2.55. Had the April contract filled in that gap or had it been able to close above its previous high at $2.51, the technical picture would be much more constructive, analysts agree.

Also of concern for chartists is the rising wedge formation that has formed over the last two months on the daily chart. Contrary to its name, a rising wedge is usually a bearish chart feature that typically manifests itself within the context of a larger downtrend. In this textbook example of a rising wedge, the upper boundary slopes less sharply than the lower boundary. Technical traders who have bought the market as it approached the lower limit and sold the market as it reached the upper limit have done well for themselves over the past two months and Tom Saal of Pioneer Futures in Miami is willing to roll the dice one more time. Specifically, he looks for a retest of trendline support to hold the $2.40 level, at which time he would endorse being a buyer.

However, technical factors will take a back seat to fundamentals Wednesday as traders brace for the latest storage report from the American Gas Association. Expectations are centered on a 130-160 Bcf draw down, which will dwarf last year’s 73 Bcf withdrawal as well as last week’s 64 Bcf takeaway.

But don’t count on a bullish reaction to the data. Natural gas futures have been a contrarian’s dream on Wednesdays of late, as the market has been able to shrug off even the most indicative data. For example, three weeks ago the release of a sizeable 156 Bcf withdrawal figure spawned surprising selling that took the March contract down to a $2.155 low on Friday, Feb. 15. Then last week the market was able to ignore a paltry 64 Bcf withdrawal to climb to a $2.465 high Friday afternoon.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.