With many regions of the United States greeting warmer-than-normal temperatures over the last few days, traders came to work Monday with a little bit of spring fever as April natural gas futures continued to probe new lows in the larger move downward.

The front-month contract recorded a low of $4.458 before closing out Monday’s regular session at $4.527, down 6.6 cents from Friday’s finish. Traders came within a couple of pennies of testing support in the $4.432 to $4.445 range, which marks the front-month contract lows from Dec. 3, 2009 and Dec. 4, 2009. A break of $4.432 would put a test of $4.361 from Nov. 24, 2009 firmly in the futures bears’ cross hairs.

“The natural gas market is extending its recent trend…with a further decline that reflects both a seasonal trend toward lower heating demand as well as a swing from the cooler-than-normal temperatures a week or two back to the warmer-than-normal readings projected for western and northern areas over the coming two weeks,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “There’s simply no viable threat to supplies here that would keep a firm floor under the market. We do expect prices to turn higher at some point once the market reaches a level that represents longer-term value, but that could be somewhere in the vicinity of $4 in our view.”

Some market watchers are quick to point out that natural gas values would be much lower than they already are if not for the significant cold this season. Prices are being propped up by the rapid decline in natural gas storage inventories as a result of a winter that was much colder than those of the last few years. After reaching a record storage level with 3,837 Bcf underground for the week ending Nov. 27, 2009, long stretches of blistering cold across much of the country have helped even up the playing field during this withdrawal season. The large year-on-year and year-on-five-year average storage surpluses have been drastically reduced or eliminated altogether. For the week ending Feb. 26, the Energy Information Administration reported that 1,737 Bcf remains in working gas in storage, which is 71 Bcf less than last year at this time and only 21 Bcf above the five-year average of 1,716 Bcf.

“The rapid development of shale gas reserves along with increased LNG [liquefied natural gas] shipments to the United States is keeping a lid on gas prices, but conversely, the storage drain of the last few months is keeping us off of the price floor,” said a New York broker. “It will be interesting to see how this market handles the shoulder season, especially as summer heat and hurricane forecasts start rolling out in earnest.”

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