Bears

Natural gas futures bears were licking their chops as some near-term weather forecasts continued to look warmer with each passing day. On Tuesday the February contract — which terminates on Wednesday — declined by 23.7 cents to close at $5.485. The March contract fell by 23.3 cents to close at $5.430.

After warding off the March contract in its last week of trading, psychological support at $4 proved to be a similar Achilles heel for April futures bears on Friday. The contract traded below that price level for most of the morning before rallying in the afternoon to close at $4.198, up 12.1 cents from Thursday and 16.2 cents higher than the previous week’s finish.

Apparently convinced that the current frigid temperatures will be short-lived, natural gas bears came out in force Tuesday to record a new front-month natural gas futures low for the current down move. February futures penetrated the old prompt-month low of $5.210 recorded on Dec. 22 to put in a $5.158 tick before closing out Tuesday’s regular session at $5.184, down an astounding 35.8 cents from Monday’s close.

The bears could be in for a great 2009 if the first natural gas storage withdrawal of the new year is any predictor of what lies ahead. The Energy Information Administration (EIA) reported Thursday morning that an anemic 47 Bcf was withdrawn from underground stores for the week ended Jan. 2, triggering a significant drop in February natural gas, which closed the regular session at $5.583, down 28.9 cents.

Christmas gifts continued to come early for natural gas futures bears on Monday as the January contract recorded another prompt-month low for the move on reports that the bitter cold engulfing much of the country would be short-lived. In quiet holiday trading, January natural gas put in a low of $5.210 before closing at $5.294, down four pennies from Friday’s finish.

As any real sign of true cold in the near-term weather forecast continued to dissipate Thursday, natural gas futures bears continued to have their way as the December contract probed lower values. Despite a $2.08/bbl increase in December crude on the day, December natural gas ended up dropping 8.7 cents to finish at $6.318.

Declining U.S. natural gas prices have a champion in the petrochemical and fertilizer industries, and if prices remain low — an unknown as Hurricane Gustav bears down — U.S. industrial production (IP) dependent on gas could increase within some sectors, and provide a boost to gas-fired generators, according to energy analysts.

After regrouping the previous two sessions as August natural gas futures recorded a gain of 3.3 cents and a drop of 6 cents, respectively, the bears were on the prowl again on Tuesday as the prompt-month contract had 44.3 cents sliced from its value. The contract dipped below $10 on Tuesday before closing at $10.067 while August crude also got back to its recent bearish ways by dropping $3.09 to finish at $127.95/bbl.

After sinking below $11 and giving bears some glimmer of hope, June natural gas futures on Tuesday rebounded to record a high of $11.477 before closing out the regular session at $11.365, up 41.1 cents from Monday’s finish.