Physical natural gas for Tuesday delivery gained ground in Monday’s trading, barely outpacing a lackluster performance on the screen.

Most points were within a penny or two of unchanged, and double-digit gains at eastern points moved the NGI National Spot Gas Average up a nickel to $1.73. Near-term weather forecasts called for normal to above normal temperatures. At the close of lackluster futures trading, March had gained 1.7 cents to $1.821 and April had slipped five-tenths of a cent to $1.862. The expired March crude oil contract added $1.84 to $31.48/bbl.

“The move in natural gas looked like a few traders were covering shorts, and the move in crude oil gave them a reason to take a little money off the table. The move certainly doesn’t seem like a change of direction,” said a New York floor trader.

“There isn’t any reason for the market to move higher, and right now we are looking at the tail end of things. There may be some stops at $2.08 to $2.10 that could run it up to $2.20 or so, but I don’t think the market has a resistance point per se. On the downside it’s getting pretty cheap, and I look for scale-down buying.”

Mike DeVooght, president of DEVO Capital, said, “With warmer than normal temperatures forecasted for the next couple weeks, weakness in the gas market is anticipated and disappointing for those looking for a mid-winter rally.” From a risk management perspective, he counsels trading accounts and end-users to stand aside and producers to sell the April-October Strip at $2.70.

Although spot futures appear headed toward a test of the $1.684 December lows, some analysts are not predicting a bottom but are just making a call on market direction for now.

“Although U.S. natural gas prices have by no means had a strong winter, the hope of an unexpected freeze had helped prop prices up somewhat,” said Nicholas Potter, a commodities analyst at Barclay’s. “But as the end of winter is in sight, expectations of wintry weather fixing the market oversupply have evaporated. With storage well over the five-year average and residential/commercial demand set to fall as we hit March, the market should brace for prices to move lower in the coming weeks.

“With peak heating demand coming to an end, prices are likely to continue to come under pressure…[O]ver the past five years residential/commercial demand has typically peaked in January (with the exception of 2015 when it peaked in February) and has fallen an average of 33% in March from the January highs. At the moment, weather forecasts are pointing to March being slightly warmer than the 10-year average. Given the market’s expectation of warm weather, there is a risk that if March forecasts move colder, you could see the market move higher. We have seen this happen the past two months as the January and February forecasts moved colder. In both cases these rallies were fairly short-lived, however.”

Market technicians, however, looking at seasonal analysis point to 15-year cycles as offering guidance to a market low. The first test would be a hold of the December $1.684 lows, but if that fails, “From the $1.684 low bulls needed a decisive break above $2.820 to have any case,” said Walter Zimmermann, vice president at United ICAP, in a weekly report to clients. In the short term, Zimmermann cites $1.80 as a support level but said, “On a decisive break below $1.800 the next step down is $1.320 with $1.000 the next step down below that”

Others aren’t so enamored of cycle analysis and point to reports on open interest and the activity of managed money. “To me, the last Commitments of Traders report shows the funds are not completely sold on whether this is a bottom or not,” said Tom Saal, vice president at FCStone Latin America LLC. “That’s probably the key. In order for the market to continue lower you are going to need aggressive selling by funds, new shorts.

“The last Commitment of Traders report showed managed money is doing more oscillation at these prices than actually adding to short positions. They are in and out and in and out. They are not showing a trend of ever increasing shorts. Their behavior shows that they are not completely sold on the trend continuing. They are not convinced the market is going a lot lower. Historically, the market does not spend a lot of time below $2. I think we are near the lows.”

In physical market trading, eastern points showed strength in spite of little help from the power sector. Intercontinental Exchange reported on-peak power for Tuesday at the ISO New England’s Massachusetts Hub eased 35 cents to $27.88/MWh and on peak power at the PJM West terminal rose $1.69 to $27.10/MWh. At the Indiana Hub, Tuesday peak power gained 83 cents to $23.08/MWh.

Gas at the Algonquin Citygate rose 77 cents to $2.82, and packages on Iroquois, Waddington rose 12 cents to $2.09. Tuesday gas on Tenn Zone 6 200L gained a stout 54 cents to $2.72.

In the Mid-Atlantic next-day deliveries on Tetco M-3 Delivery rose 2 cents to $1.32, and gas bound for New York City on Transco Zone 6 added 9 cents to $1.83.

Major trading centers were firm as well. Gas at the Chicago Citygate fell 3 cents to $1.85 and packages at the Henry Hub rose 3 cents to $1.84. Deliveries on El Paso Permian changed hands a nickel higher at $1.61,and gas priced at the SoCal Border Avg. Average added 7 cents to $1.71.

Near-term weather is taking shape in the form of storms but with little temperature impact. “Starting Monday night, the chance for severe storms will increase in the South, mainly in central and south Texas with large hail being the primary concern,” said forecaster Wunderground.com “A powerful low pressure system will bring a potential outbreak of severe storms and tornadoes to the South for the start of this week. The same area of low pressure will deliver a swath of snow and strong winds to the Midwest and Great Lakes.”

Wunderground.com forecast that Monday’s high of 50 in Washington, DC, would drop to 44 on Tuesday before a rise to 56 on Wednesday, 8 degrees above normal. Chicago’s Monday high of 42 was seen rising to 44 Tuesday before sliding to 39 Wednesday, one degree above normal.

El Nino is slowly slip sliding away. According to the latest data from NOAA, El Nino conditions should continue to gradually weaken, transitioning to neutral conditions (neither El Nino nor La Nina) by late spring or early summer 2016. The weekly sea surface temperature reading, taken within the Nino 3.4 region near the equator, is at 2.4 degrees C above average, which is down slightly from the previous week’s 2.5 degrees C above average. The +3.1 degree C peak recorded in late November 2015 was the highest weekly value observed during any El Nino event in NOAA’s records going back to 1950.