March natural gas futures spiked to a more-than-two-year high on Friday as traders were beginning to fully digest the fact that pre-winter forecasts for a number of mild stretches this season are turning out to be completely incorrect. The prompt-month contract settled Friday’s regular session 25.5 cents higher at $9.146 and was pushing even higher in the Globex electronic session late in the afternoon. Friday’s regular session close marked a 48.6-cent increase over the previous week’s close.

After being repelled a number of times during the week by the $9.050 top that was recorded back on Nov. 30, 2006, March natural gas on Friday roared above the well respected resistance price level. A prompt-month contract has not closed higher than Friday’s $9.146 since a $9.316 finish was recorded on Jan. 31, 2006.

“While a lot of people are having trouble making sense of this move higher, I think it boils down to the fact that all during the month of January the forecasters were calling for an above-normal temperature February,” said Steve Blair, a broker with Rafferty Technical Research in New York. “Well, guess what, it didn’t happen. In fact, it is the total opposite of what the forecasters were calling for.

“In addition, I think these funds covered some shorts on the way up through the $8.500 and $9 level. We had a little trouble during the week with the major support at $9.050, but that got taken care of on Friday. Futures pushed lower Friday, down into the high $8.70s, but that was as far as it could get, which launched another surge higher. We may have had some ‘bargain basement’ buying down around that $8.780 level. This move could continue higher because the weather is not looking any warmer here in the near future. Now with $9.050 behind us, we have minor resistance up at $9.200.”

Blair also noted that the storage picture is certainly not as pretty as it once was. “Coming into the withdrawal season late last year, storage numbers were running close to the previous year’s numbers, which was a very comfortable level. Now the picture looks a lot different,” he said. “With 1,770 Bcf in the ground, current stocks are 127 Bcf less than last year at this time and only 97 Bcf above the five-year average. If we get another couple of good pulls from storage, then it becomes an even friendlier picture for the price bulls.”

Others agree that there is currently a supportive supply environment. Thursday’s release of Energy Information Administration inventory figures showed a widely expected 172 Bcf withdrawal, but analysts noted shrinking expectations of season-ending supply figures.

Jim Ritterbusch of Ritterbusch and Associates said expectations of a 1.5 Tcf surplus by the end of March are now in sight for the end of February. Supplies stood at 1.77 Tcf as of Feb. 15. “As a result, a seasonal trough in storage that is usually achieved at around late March-early April is likely to be achieved within the 1.3-1.4 Tcf zone, a supply that provides only a marginal surplus against average levels,” he said in a note to clients.

With the bulls on a roll, the National Weather Service’s six- to 10-day forecast Friday for Feb. 28 through March 3 was not helping the bears gain any traction. While above-normal temperatures are to occupy most of the West during the period, the entire East is still expected to be shivering under below-normal conditions.

The near-term picture is not looking any better. According to, a large storm with an attached cold air mass is expected to descend on the Plains and the Northeast in the coming week. “The talk of the town next week will be the big storm that moves from the central states to the Eastern Seaboard,” said John Kocet, a meteorologist with “This system has potential to dump a lot of snow from the central Plains to the Northeast. Furthermore, regions south of the storm track may be subjected to another bashing from destructive thunderstorms. On the heels of the storm, another very cold air mass will plunge out of Canada, producing much-below-normal temperatures from the Plains to the East Coast.”

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