February natural gas futures rose Friday as traders showed little appetite for risk and elected to cover short positions prior to the long holiday weekend. Short-term traders see little likelihood that the market will continue higher. At the close February futures rose 7.3 cents to $4.480 and March gained 7.1 cents to $4.490. February crude oil added 14 cents to $91.54/bbl.

“This looks to me like just short covering going into the long weekend,” said a New York floor trader. The trader pegged near-term resistance at $4.52-4.53, but if the market were to hold that level, “it could then act as support. It’s a long weekend and anything can happen. Maybe Tuesday or Wednesday we test that, but if everything remains the same I suspect we would fail and the market would work its way back down.”

He added that $4.41(Thursday’s February contract settlement) “was not a significant point, but maybe someone has a different pencil [technical interpretation].”

Analysts still continue to focus on weather and weather forecasts, but Kyle Cooper of IAF Advisors, Houston, contends that “in general the degree of cold that was forecast has not materialized. Several forecasters have been very exaggerated and none of them have been right, and now it seems that they are compensating for what was a warm forecast earlier with a cold forecast now. At the beginning of winter I had seen a number of estimations that season-ending storage was going to be above 2 Tcf, but now I think you are looking at 1.5 Tcf.”

Exaggerated or not weather forecaster MDA EarthSat in its Friday six-to 10-day outlook showed below to much below normal temperatures north and east of a broad arc extending from eastern Montana to western Colorado to southern Louisiana.

“The forecast has turned a bit colder today [Friday] from the Central Midwest to the interior Northeast in the form of an expansion of much belows,” said the forecaster. “Western Canada should finally start turning warmer during the second half of the period after an extended period of strong cold. Models are still struggling to find consistency, especially the operational runs. Our forecast leans towards the Euro ensembles, but varies in some details.”

Top analysts see a somewhat unfocused market with near-term cold largely discounted by the market, but prices unlikely to move lower until actual warm temperatures surface in the forecasts.

“While daily updates to the short-term temperature views are still driving much of the day to day price movement, it is difficult to determine where the market’s focus exists as far as time frame is concerned,” said Jim Ritterbusch of Ritterbusch and Associates. He sees cold six- to 10-day forecasts already in the market, but farther out “the longer term eight- to14-day outlook that extends from late next week toward month’s end is acquiring more of a neutral/supportive appearance with below normal temps largely confined to the less intensive southeast quadrant of the country.

But, until some warmer than normal temps begin to show up within the outlooks, sustaining price declines will continue to prove problematic. The dynamic of a sizable reduction in the supply surplus against average levels will be sustained with next week’s EIA [Energy Information Administration] data release, a development that could keep additional institutional selling at bay.”

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