Support at $4 held up once again on Tuesday as April natural gas futures notched a low of $4.058 before rebounding to close at $4.130, up 5.1 cents from Monday’s finish.

With each passing day the prompt-month contract fails to trade with a $3 handle, traders begin to more hotly debate whether the market is currently just pausing before heading lower, or whether it is bottoming.

“I’m a pretty long way from saying this is any sort of a bottom,” said a New York broker. “There are too many things aligning for the bears right now for that to be true. We’ve got comfortable storage levels and are likely going to see our first injection in Thursday’s report, which would be two weeks earlier than normal. On top of that we’ve got a shale gas bonanza on our hands, so supply should not be an issue, while demand is still lacking in this sluggish economy. The $4 price level is currently putting up a pretty solid support fight, but I just don’t see it holding under this kind of pressure.”

Market bears were no doubt pleased with Monday’s April contract low of $4.036, a new low for the move, and analysts are scratching their heads to figure out why the market isn’t seeing value at current prices. “The big question facing us is whether traders will see a potential break below $4/MMBtu as a stop-loss point or as the year’s outstanding buying level. We tend to see value at existing numbers, but we are not already long,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm.

According to Beutel, “Those that are already long have been so based on the most devastating of market factors: logic. After having fallen by as much as they have, prices have been looking like ‘value’ since breaking below $5/MMBtu. This is especially true given price levels just slightly below that figure as we started the heating season with even more abundant storage numbers. Prices have been dropping despite a really rather extraordinary reduction in the amounts being held in storage over this past winter.”

Any extraordinary reductions in storage are likely to come to a halt soon. Although the heating season does not traditionally end until March 31, estimates from the National Weather Service (NWS) of heating requirements show a sharp reduction from seasonal norms. For the week ending March 27 eastern and Midwest energy markets are predicted to see a steep decline in the number of heating degree days (HDD). New England is expected to see 144 HDD, or 44 fewer than normal, and New York, New Jersey and Pennsylvania are forecast to have 126 HDD, or 42 fewer than normal. The Midwest from Ohio to Wisconsin should experience 151 HDD, or 23 fewer than normal.

Curiously, the deep cold that ripped through the Midwest and East in January and February gives the impression that overall heating requirements are higher than normal, but according to NWS figures for the heating season that began July 1, 2009, New England is 6% below normal, or 353 HDD from its average of 5,087; the Mid-Atlantic states are also 6% below normal, or 272 HDD from their norm of 4,630; and the Midwest is 3% below, or 196 HDD from its normal seasonal accumulation of 5,256.

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