After pushing the February contract up to a $6.51 high just after 11 a.m. (EST), gas futures traders encountered a little bit of vertigo in afternoon trading as the market crept lower instead of approaching $7. The prompt month settled 1.5 cents lower at $6.388, while March futures, poised to take over as prompt month in Thursday Access trading, closed down 2.3 cents at $6.421.

Price declines from petroleum futures helped to corral natural gas prices Wednesday as a bearish crude stocks report and word that Nigerian oil workers had canceled a strike allowed crude futures and heating oil futures to travel lower. March crude settled down 86 cents at $48.78/bbl, while February heating oil closed 2.15 cents lower at $1.4033/gallon.

IFR Energy Services’ Tim Evans said that while the market could be building tension for a major price adjustment he wonders whether that view doesn’t project more drama than is actually present. “Prices could just be sitting here because no one especially cares to buy or sell at this level anymore, having already had plenty of chances,” Evans said. “The natural gas market remains well within its recent nest of trading ranges, with today’s span fitting inside of Tuesday’s, which fits inside of Friday’s, which fits inside of the range from Jan. 18.”

He noted that Thursday’s natural gas storage report may change all that, adding that he is now hearing consensus expectations in the 210-215 Bcf range as a benchmark for market reaction. Evans said “a figure less than 215 Bcf may fail to inspire fresh buying, since traders can check the report off their list of bullish threats and look to the warming trend in temperatures to take its place.”

Ritterbusch and Associates’ Jim Ritterbusch said he expects a natural gas storage withdrawal of 208 Bcf, but added that estimates vary widely from 180 to 240 Bcf. “Comparisons appear bullish given last year’s withdrawal of 184 Bcf and the five-year average decline of approximately 165 Bcf,” he noted. Ritterbusch said that he expects the market to eventually trend lower from its’ current trading range, but adds that “a sharp break in the oil complex or fresh bearish news will likely be required to drive such a development.”

Following ICAP’s online storage options auction Wednesday, the implied market forecast for the Energy Information Administration’s storage report for the week ended Jan. 21 moved from a 225 Bcf withdrawal to a 229 Bcf withdrawal.

Other traders continue to see a primarily weather-driven market. “In [some areas of] the East, it hasn’t been above freezing for 10 days. That will continue for another six,” contends Jerry Saccente, broker with ABN AMRO, New York. He said that following that period it will warm for two days and then return to a cold period.

“There is ample gas in storage but in this weather environment of a low of 10 degrees and a high of 30 it’s unlikely that the market is going to collapse,” he said. “I expect that between now and the end of February there will be a big upward squeeze in the market and many of the shorts will be shaken out. The cold weather will gradually disappoint the bears.”

However, looking further down the road, the weather outlook is mixed. According to the latest eight- to 14-day forecast released Wednesday by the National Weather Service, normal to below normal temperatures are forecast south of a line extending from Boston through central Missouri and central Idaho to Southern California. Above that line, above normal temperatures are expected to prevail.

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