Traders on Tuesday continued to look past the current cold and stormy spell that is dominating the eastern half of the United States as the March natural gas futures contract continued to probe lower values. The prompt-month contract reached a low of $5.262 before closing the day’s regular session at $5.290, down 11.1 cents from Monday’s finish.

“The current cold blast is really being overlooked intentionally because of where we are in the season,” said a Washington, DC-based broker. “We’ve had these wonderfully cold temperatures, which is upping the demand for gas, but people have to remember that this is it. While it is cold and is expected to remain cold for some time, we’re already past Groundhog Day. What we’re seeing is that the natural gas market is not a market that is concerned about all of the blue on the national weather map.”

While the weather has been taken out of the equation a bit, the broker noted that the bears have not made any great strides to the downside either. “Sure, we’ve had back-to-back 11-cent drops, but where did that leave us? We’re still sitting rather comfortably within the general $5 to $6 trading range of the last number of weeks,” she said. “From a technical perspective, we’re nowhere. My natural gas book reflects that. We tend to see the buyers and sellers move in packs, but I’ve only done dribs and drabs of buying recently. If I were a producer and hadn’t done my hedging already, I don’t think I would do it here.”

The Mid-Atlantic blizzard over the weekend certainly set the stage for hefty gas usage for next week’s inventory report, but Monday’s 11.4-cent decline in the March contract to $5.401 hinted that traders are looking for something else. Don’t look too far ahead, cautions one trader. “March is almost always a bullish month as traders get into it thinking spring, but almost always feeling winter; March is statistically colder in degree days than November is. It’s just that we have the full winter ahead of us in November and not so much left in March,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm. He noted that winter lasted well into April last year, “so we need to be careful not to endorse the second-half-of-February winter-is-ending mindset, but we do often see it.”

The rangebound nature of the market seems to be taking its toll on the folks charged with the task of determining the market’s next move. Directional traders reduced their holdings on both the long and short side of the market for the week ended Feb. 2. According to data from the Commodity Futures Trading Commission, long positions (2,500 MMBtu) held by managed money traders on IntercontinentalExchange fell by 22,356 to 543,434 and short holdings dropped by 8,621 to 19,931 contracts. Overall open interest declined by 165,560 contracts or 4.4%.

On the New York Mercantile Exchange long positions (10,000 MMBtu) held by managed money traders slid by 10,315 contracts to 134,405 and short contracts declined 17,727 to 165,778. Total open interest on Nymex rose by 21,922 contracts or 2.3%.

When aggregated to a 10,000 MMBtu equivalency, long positions on both exchanges fell 15,904 and short holdings declined 19,882. For the five trading days ended Feb. 2 March futures rose 2.4 cents to $5.454.

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