The sell-off continued yesterday in the natural gas pit at Nymexas traders continued to take profits following the rally to $4.715last month. After gapping lower for the second day in a row, theAugust contract chopped mostly sideways before finishing at $3.66,down 5.5 cents for the session.

Since notching a $4.36 high just two weeks ago, the prompt monthhas come under heavy selling pressure that has rung up losses ineight of the last 10 trading sessions. However, with only twotrading days left before the August contract expiration, thequestion is whether the market will continue to sift lower orrebound on short-covering.

While admitting yesterday’s choppy, sideways trading ischaracteristic of a market that is on the verge of a correctivebounce, Cynthia Kase of New Mexico-based Kase and Co. remainsskeptical of the market’s strength. “Every time [the market] hasmoved lower the bounce has been smaller than the one before. Wecould see a short-term recovery to resistance at $3.80, but oddsare in favor of going lower,” she said.

That said, Kase believes the August contract has an additional20 cents of downward potential before its expiration Thursday. “Ifpeople were going to buy August they would have started to do soalready,” she reasoned.

However, she is slow to write off September and looks forproducers who had sold calls at an average cost of $3.30 or 3.40 tobuy them back as the market moves lower. “While a couple months agothey were happy to lock in $3.30, now they are convinced prices aregoing to $5.00.”

The AGA will release its weekly storage report at about 2 pmtoday. Market expectations are centered on a 60-80 Bcf injection,which straddles last week’s 70 Bcf refill. Comparatively, last yearat this time the market only injected 41 Bcf and the five-yearaverage is 61 Bcf. Please check https://intelligencepress.com forintra-day updates Wednesday.

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