Pressured by forecasts calling for temperatures to crest the 50-degree mark in the Northeast this weekend, natural gas futures continued lower Tuesday as bulls appeared increasingly content to ignore the expiring March contract in favor of the spring and summer months.

With that, March spent its penultimate trading day in a gentle downward spiral, losing an even nickel to close at $5.077. At 78,359, estimated volume was moderate for the session.

Sources polled by NGI Tuesday agreed that unless there is a dramatic shift in the weather pattern, winter’s impact on the natural gas market is all but finished for the season. “In January, we had our pick of buyers,” a Northeast trader noted. “Now we have to work a little harder to place the gas. The buyers just aren’t as hungry,” he said, pointing to forecasts calling for a big warm-up this weekend.

With many trading locations dropping below the $5.00 mark, the cash market gave futures traders little choice Tuesday. At $5.06, March’s low Tuesday was a new 10-week low for both the contract and the spot month at Nymex. The April contract, which will become the Nymex prompt month Wednesday evening, also slipped Tuesday, but managed to keep its losses to just 2.2 cents.

Probably most encouraging for bull traders, however, was the activity in the out months, which resisted the urge to tumble lower with the spot contracts. That enabled the April-October summer strip to eke out a 0.5-cent advance to close at $5.155 Tuesday. Moreover, the bullish price action confirmed what traders have been saying for several weeks now — that the real potential for higher prices will come this summer when generation load and storage injection demand will vie for shrinking natural gas supply.

But despite the bullish euphoria surrounding the upcoming summer, bears are not ready to call it quits quite yet. Having watched the market break solidly below the $5.10 level, traders now see the $4.86 area as a possible safety net for gas prices. “I believe the prospects for [April futures] to make a significant low in the $4.86-94 area is quite good,” commented Craig Coberly of GSC Energy in Atlanta.

Once the downside momentum has run its course, Tim Evans of IFR Pegasus in New York eyes $5.16 as a potential gateway for access to the pivotal $5.25 level, basis the April natural gas contract. To take advantage of a move above that level, Evans looks to open a 50% long position at $5.28. Should the market prove him wrong, a $5.06 sell-stop would limit his losses.

So with lower prices expected in the short to intermediate terms, and higher prices expected in the longer term, where does that leave us for Wednesday’s expiration. Sources suggested that while the March contract closed near its $5.06 low for the session, it did not make a push for the psychologically important $5.00 level. Some traders believe this reveals a lack of bearish leadership in March futures, paving the way for a bit of short-covering ahead of expiration.

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