Confronted with bullish near-term forecasts and bearish longer-lead weather outlooks, natural gas futures traders chose to side with the latter Tuesday as they quickly took back a lion’s share of Monday’s 12-cent advance. By virtue of its 9.4-cent decline and $4.226 close Tuesday, the January contract again rests near the bottom of the $4.16-48 trading range. The same range has bounded the market’s price moves since Nov. 18.

Another major snow and ice storm is poised to strike the Carolinas Wednesday, working its way north through the Mid-Atlantic to New England by Thursday, and according to Weather 2000, this one will be more severe than the one that struck the Northeast Thanksgiving Eve. Moreover, the cold air associated with it “will be more reminiscent of a Polar Blast [seen] in late January.”

The New York-based weather modeling group goes on to warn its customers not to assume that a moderation from current blast of cold air infers that El Nino has taken over. “Just because temperatures become less cold than before doesn’t mean they’re warm, and just because there are mild days doesn’t mean a particular month or season isn’t very cold,” wrote Weather 2000 Tuesday. “It all comes down to net results…If some someone see a forecast high departure for New York of -5 in early December, they think cold; yet interestingly if they see a forecast high departure of +2 in late December they think mild, even though that translates into a colder actual day.”

And while the National Weather Service continues to call for temperatures across the country to moderate back to above normal by the middle of the month, Weather 2000 sees continued cold, with maximum and minimum daily temperatures to range between 0 and 5 degrees below normal for the Dec. 11-18 time frame in cities such as Boston, New York, Washington, DC, Atlanta, Chicago, Cincinnati, Pittsburgh, Memphis, Dallas and Houston.

But even if temperatures warm up by the middle of the month, the cold weather prevalent now may have already done a number on the storage supply. Admitting that he may be a little on the high side of most expectations, Kyle Cooper of Salomon Smith Barney looks for a whopping 89-99 Bcf storage withdrawal to be announced Thursday morning by the Energy Information Administration. In addition to the disparity between regional and national degree days accumulations for last week, Cooper chalks up the difficulty in predicting a number this week to the uncertainty surrounding the Thanksgiving holiday, which is typically a low demand period for industrial users of natural gas.

The market shot 12 cents higher Monday on the news that 49 Bcf was pulled from storage for the week ending Nov. 22. Last year the market injected 4 Bcf and the five-year average is calculated to be a 17 Bcf withdrawal. The common range of expectations, says Driscoll, is for a 79-85 Bcf pull. However, at least one analyst calls for as small as a 40 Bcf decrease.

Now entering its 11th day within the same trading range, the January contract is bounded by several key technical levels. To the upside, support exists at Monday’s $4.35 high, which coincides with the equilibrium trading level from last week. Should prices continue lower, the first target will be the Nov. 15-18 chart gap down to $4.13. A breakdown from that point would put pressure on psychological support at $4.00.

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