July natural gas futures ground lower in listless trading Friday as traders cited the bearish mantra of expected strong injections into gas storage and a lack of weather in populous energy markets. Short-term traders expect prices to fall early next week.
At the close July dropped 6.1 cents to $4.032 and August fell 8.5 cents to $4.193. July crude oil skidded $1.82 to $69.55/bbl.
"It was a very slow day and there weren't a lot of guys around. I think the market is looking at some big [injection] numbers for the next two weeks, and with crude trading lower, I wouldn't be surprised to see natural gas come in 10 cents lower Monday morning," said a New York floor trader.
"I expect the market to test $3.650 to $3.700 early next week. There is no weather and it has been cool in the Northeast. It seemed like there was some decent buying early in the week, but we have pulled back and there doesn't seem to be a lot of conviction with either buyers or sellers. There are a few more shorts out here than there are holders of length."
Others also echo the market's lack of conviction. "People out here are looking for anything," said a New York broker. He added that "you could say this [chart pattern] is bullish and the recent declines are just a correction, or you can say this market is totally running out of steam and I wouldn't buy this market I would sell it."
"I went out to dinner Monday night with a former natural gas floor trader and he said it was fairly simple. 'You buy $3.500 and you sell $4.250 to $4.500.' There have been a number of times over the last two months to do that. Until the market shows you differently, that's what you do," the broker said.
"I'm not that bearish on natural gas, but fundamentally we don't have any reason to be at these elevated levels for crude, products or natural gas."
Market technicians are equally indecisive and see neither a bullish nor bearish case for the market. "The bears trumped Thursday's bullish engulfing pattern with a bearish engulfing formation on the daily candlestick chart," said analysts at United Energy.
They added that there was little evidence of "bottoming action," but at the same time "we also see little evidence to suggest further downside. Bulls need a close above $4.361-4.446; bears need a close below $3.200. In between is a technical no-man's land."
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