The NYMEX April natural gas futures contract fell 4.4 cents to settle at $4.618/MMBtu Friday after a day of largely directionless trade and consolidation, sources said.
"We continue to consolidate above $4.50[/MMBtu]," TFS Energy Futures broker Gene McGillian said. "The market took on a little bit of a bounce [Thursday] ... but when we failed to attract new buying, it kind of came off. Now it's just treading water."
As for fundamentals, McGillian said that while temperatures are poised to rise next week in the US Midwest and Northeast, that trend will reverse and turn colder again by the end of March.
The US National Weather Service continues to forecast below-average temperatures across the eastern half of the country in its six- to 10-day and eight- to 14-day outlooks.
The low level of storage inventories -- which stood at 1.196 Tcf as of last week -- has prompted many traders to question whether the market will be able to refill inventories at a sufficient pace ahead of next winter.
"However, limited price moves on the forward curve suggest that the market remains confident that storage should be able to rebuild back to relatively comfortable levels at the end of October," said Barclays Capital analyst Shiyang Wang.
McGillian said the market, on its way to highs well above $6/MMBtu last month, has attracted a lot of speculative length and "I don't think we've shed a lot of those speculators yet. It's the $64,000 question -- if we break below last week's lows around $4.45[/MMBtu], will we see longs start to bail?"
The contract traded Friday between $4.566-$4.681/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT).
