Limiting the price rebound to just one day, natural gas futures sifted lower ahead of the weekend Friday as trade selling overcame an optimistic opening print. The June contract was the hardest hit, slipping 7 cents on the day and 21.5 cents for the week to close at $4.278.

Following Thursday’s 14.6-cent price correction, bulls were fast out of the chute Friday as they promoted June futures to its highest opening price since last Monday. However, in similar fashion to the price action seen last Monday, the market was unable to fill in the chart gap up to $4.44, and ultimately fell under its own weight.

Following the session, traders were mixed as to what to make of Friday’s price action. Bulls were quick to point to the higher high and higher low Friday, while bears insisted the trend is still solidly in their favor. For Ed Kennedy of Miami-based Pioneer Futures, Friday’s steady selling created a negative day on the charts, potentially paving the way for a retest of last week’s lows. “As soon as the buying dried up, we saw trade selling pretty much throughout the rest of the day.”

Aside from the negative day structure, Kennedy maintains that last week’s price action leaves traders with few clues as to where prices are headed this week. Accordingly, he looks for cash prices to provide some direction Monday. Also of potential impact Monday, traders agree, are early predictions ahead of Wednesday’s American Gas Association storage report. On balance, market watchers are looking for another injection of 100 Bcf or more, which would once again easily eclipse last year’s comparable figure (46 Bcf).

According to the American Gas Association, 108 Bcf was injected into underground storage facilities for the week ending May 4, bringing storage to 29% full at 958 Bcf. That injection was slightly more than the common range of expectations of 95-105 Bcf and almost double the 58 Bcf put in the ground during the same week last year. The market reacted in its typical schizophrenic manner Wednesday by free-falling lower only to rebound higher just minutes after the report was released.

For Kyle Cooper of Salomon Smith Barney, however, a much lower-than-expected injection in the East coupled with a slightly lower-than-expected refill in the Producing Region added up to a total injection less than his preliminary prediction of 115-125 Bcf. Nevertheless, he believes that higher deliverability along with warm weather and a string of large storage injections has set the stage for further futures losses.

“The futures continue to be weathered by the storage storm, with the outer-month curve remaining solidly contangoed (a phenomena which — similar to a circular reference — is actually fueling the storm),” wrote Ronald Barone of UBS Warburg in his weekly NatGas Insight. As a rule of thumb, the average cost of carrying storage for a month is on the order of 3-4 cents—anything over that and storage operators can make a profit by buying spot gas and simultaneously selling out-month futures. Currently there exists a 62-cent spread between prompt cash and January futures, well above the approximately 30-cent cost of carry.

In daily technicals, June has support first at $4.23 and $4.20 and then again at last week’s low of $4.145, according to Kennedy. On the upside, resistance is seen at $4.31, ahead of another wave of selling possible at Friday’s high of $4.40.

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