Natural gas futures continued lower yesterday and were able tobreak through a key support level. The June contract finished 4.5cents lower at $2.191 after mapping out a $2.17 low for the day.

Few traders were surprised by the market’s ability to trendlower amid what many felt were almost nonexistent fundamentalfactors yesterday. In the latest 6- to 10-day forecast the NationalWeather Service looks for a combination of normal and above-normaltemperatures for most of the country. Only the areas of New Yorkand northern New England are expected to see much above-normaltemperatures.

Tim Evans of the Pegasus Econometric Group is unimpressed withthe expected warmer than usual weather in the Northeast and pointsout that those temperatures will do little more than cause peopleto shed their sweaters during the afternoon hours. Instead, hefeels the technical picture is “very bearish,” which could lead tofurther losses into the weekend. “June formed a nice top between$2.205 and $2.41. Now that we have moved below that area ofconsolidation prices could be headed for the $2.05 level, whichrepresents a 50% retracement from the $2.41 high and $1.69 low,” hesaid.

However, in order for prices to continue lower the market mustfirst get past another potentially bullish storage report. TheAmerican Gas Association said that 72 Bcf was injected intounderground storage facilities last week. Although that fell at thetop end of industry expectations focused on a 50-70 Bcf build, itwas less than the 100 Bcf refill last year. The oft-quotedyear-on-year surplus now stands at just 103 Bcf, down significantlyfrom the 704 Bcf surplus that existed last December.

In daily techincals June now has support at the $2.05 level,while previously failed support of $2.205 now becomes resistance,Evans said.

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