With another dose of winter storms and chilly temperatures for much of the country set for later in the week, January natural gas futures — which expire on Tuesday — rebounded on Monday to put a six in front of a prompt-month contract’s price for the first time in almost a year. The contract notched a $6 high in afternoon trading before closing out the regular session at $5.990, up 34.7 cents from last Thursday’s close.

Another cold blast along with expectations of a healthy storage withdrawal for the week ending Dec. 25 allowed futures to test the upside. The last time a front-month contract traded with a $6 price was when the February 2008 contract notched a $6.004 high on Jan. 8, 2008.

Trading almost in lockstep with January 2009 futures, the February 2009 contract, which will see its first regular session front-month action on Wednesday, closed 29.8 cents higher on Monday at $5.996.

“The natural gas market is…anticipating some solid net withdrawals from U.S. natural gas storage on the back of ongoing cold conditions, with short-covering in the January contract ahead of…[Tuesday’s] futures expiry as part of the mix,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “As the current cycle of cold is matching up against what has been a warm period over the past five years, we see some easy storage comparisons that make a falling year-on-five-year average storage surplus an easy call.”

Looking at Thursday’s natural gas storage report for the week ending Dec. 25, Evans’ early estimate is for a 160 Bcf draw, which if realized would be larger than last year’s 144 Bcf pull and significantly larger than the five-year average draw for the week of 120 Bcf.

“The year-on-five-year average surplus that was 513 Bcf as of Dec. 4 has already been pulled down to 395 Bcf as of Dec. 18, but it looks as though it will drop to 139 Bcf by Jan. 8, with some cold temperatures in the eastern U.S. still in front of it at that point,” Evans added.

Weather bulls note that not only did the remains of the “Holiday Blizzard” pummel the Northeast Monday, but a system brewing in the Southwest is expected to gradually move to the Northeast and reach major energy markets by the end of the week.

“As this system moves away, a new system will begin to spread into the Southwest and into Texas, bringing a chance of a wintry mix to the Southern Plains…through Wednesday,” said Mark Avery, lead meteorologist with The Weather Channel. “Some heavy rain is possible near the Gulf Coast [Tuesday] night into Wednesday, with snow possible from the Four Corners to the Great Lakes. Longer term, this system is forecast to evolve into a storm that brings rain and snow to the East Coast for New Year’s Eve and New Year’s Day.”

Looking at the technicals ahead of Monday’s trade, Peter Beutel, president of Cameron Hanover, said last week’s trade solidified $5.930 as reinforced resistance and that “any decisive breakthrough with a settlement above that level would have to be seen as a major technical success for the bulls and it would confirm upside objectives to levels above $7.00/MMBtu.”

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