After settling below $6 on two consecutive sessions prior to the long holiday weekend, March natural gas futures on Tuesday spent the first half of the day getting back to $6 and the second half exploring higher, settling at $6.103, up 19.5 cents. The April natural gas contract trumped that, closing 23.4 cents higher at $6.221.

Winding closer to expiry on Thursday, March natural gas was influenced by large gains in the petroleum futures markets. An increase in supply concerns compounded with colder weather allowed March crude to hit a high for the year at $51.40/bbl, before settling at $51.15/bbl, up $2.80 on the day. Similarly, March heating oil closed over 9 cents higher at $1.4402/gallon.

IFR Energy Services Tim Evans said the failure of the natural gas market to collapse following last week’s weakness should be viewed as something of a “moral victory,” bringing on a round of light short-covering by disappointed bears. “The sharp surge in petroleum prices is helping to stiffen resolve here, and the weather developments were a bit more supportive than otherwise, at least compared with the way things looked last week,” he said.

Taking a peak at April natural gas, Evans pointed out that the contract has reversed higher and looks set to challenge intermediate-term resistance between $6.20 and the $6.31 peak from Feb. 10. “If the market manages to clear that hurdle, it would convert the recent range trading into a base of support from which to attack prior highs at $6.48-6.52 and $6.61.”

However, Evans noted that if April prices reverse through minor support at $6.03, then last week’s $5.95 low and the month’s earlier lows at $5.85 and $5.71 could be challenged.

Looking towards the Energy Information Administration’s (EIA) Thursday natural gas storage report for the week ended Feb. 18, Evans said he sees a repeat of last week’s report. “Heating degree day accumulations came in almost unchanged from the prior week, so we’ve adjusted our estimate for Thursday’s [EIA] report to 90-100 Bcf, approximating last week’s 98 Bcf draw,” he said. “While that’s a slightly higher level than anticipated, it is still well [below] the 131 Bcf five-year average for the period.”

He noted that the natural gas futures market remains a market that is limited by a hefty 313 Bcf year-on-five-year average storage surplus, which could get even bigger before it gets smaller.

Advest Inc.’s Jay Levine said March continues to struggle with the $6 level, but it could just be a matter of time. He said he would “consider using $6 as my pivot, with initial support (below) starting closer to, if not slightly below, $5.90 down to $5.85, followed by $5.75 and $5.55 respectively. As far as resistance, consider this low $6 area, but also consider the next time through it might not stop so easily, so I’d look for resistance from $6.175-$6.205/21, then closer to $6.40, if not $6.45.”

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