Working off oversold conditions, natural gas futures turned higher Tuesday, as locals tried to pick a bottom, and trade and commercial sellers were slow to emerge. The end result was a 9.4 cent gain to $3.872 for the December contract, just a few ticks below its high for the session. Estimated volume was 65,897.

With storage and weather solidly in bears’ favor heading into the trading session, traders had to turn to technical factors to rationalize their buying impulse. By dropping 12.5 cents Monday, the December contract broke to new two-month lows. However, in doing so, the market had overextended itself, paving the way for Tuesday’s rally.

Natural gas prices rallied Tuesday even without help from the nearby crude oil pit, which was essentially unchanged despite the rejection of the U.N. resolution by the Iraqi Parliament. December crude finished at $25.90, down 4 cents for the session.

However, weakness in the crude oil pit was not the only somewhat bearish influence natural gas traders chose to overlook Tuesday. Also of impact were weather forecasts, which continue to call for above normal temperatures. In stark contrast to forecasts from a month ago, the latest six- to 10-day forecast, released Tuesday by the National Weather Service, calls for above-normal temperatures across most of the country. In fact, only the Mid Atlantic, Southeastern U.S. and Gulf states are expected to see normal readings, with a dollop of below normal readings predicted in parts of Georgia, North Carolina and South Carolina.

But while the weather forecast paints a negative picture of the demand outlook, the storage report might prove to be a bullish boost for the supply side of the market. Last week the market rallied to its high water mark for the week on the news that 27 Bcf had been drawn from storage for the week ending Nov. 1. Looking ahead at this week’s report, estimates range from a 5 to 49 Bcf withdrawal.

Citing what he believed to be a “suspect” withdrawal number last week, Kyle Cooper of Salomon Smith Barney said their official estimate this week is for a draw of between 39 and 49 Bcf. “This will compare against a build last year of 35 Bcf, a three year average build of 17 Bcf and a five-year average build of 19 Bcf,” he said in his Futures Research note.

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