In concert with double-digit cash market losses, natural gas futures slipped lower Friday as a fair number of sellers waited until the last 30 minutes of trading to shed their long positions. The expiring October contract was hardest hit by the selling, dropping 11.2 cents for the session to its final resting place at $4.43.

With that October now owns the distinction as the 2003 contract month to notch the lowest settlement price. During its tenure as prompt month, it dropped 45 cents.

Marketwatchers polled by NGI agreed that weaker cash market prices set the tone early Friday. Moderating weather, coupled with slackened weekend demand, were seen as factors contributing to the physical market softness. NGI‘s Henry Hub physical gas price tumbled into the lower $4.40s for weekend gas flows.

Also at work, traders agreed, was a little residual selling following the news Thursday that a whopping 100 Bcf was added to underground storage facilities in the week ending Sept. 19. After initially checking higher last Thursday, the market shuffled lower in the afternoon and probably for good reason. That injection, taken with the weekly refills from the two prior weeks, add up to a three-week storage build of 299 Bcf — a record for the month of September.

Storage now stands at 2,688 Bcf, which is only 93 Bcf shy of the five-year average. Looking ahead, that deficit will likely contract further this Thursday when the weekly injection surpasses the five-year average of 62 Bcf. Early expectations for that build center on a mid-90s Bcf range.

However, some took heart in the market’s ability to rally — if only briefly — following the storage report. “The market also failed to break below support in both October and November contracts,” chipped in George Leide of New York-based Rafferty Technical Research. “Other than that, bulls don’t have much to go on right now. It’s not constructive, but the market is hanging in there.”

That being said, Leide is taking a wait-and-see approach to the market as November ushers in the five-month winter strip. “In order for the market to break higher, we need a close above support in the $4.88-90 area. Until then, any rallies to that area should be sold, especially the first time [the market rallies],” he continued.

Another consideration that technicians will be assessing this week is whether the market will make a quick check lower to fill in the roll-over gap created on the daily continuation chart between October’s $4.52 high Friday and the prevailing price of November futures Monday morning. Should the market fail to find support at the $4.52 level, Leide would looks for a possible move down to the October contract low at $4.39. “This market has yet to collapse. It [just keeps] suffering through slow grinds to new lows mixed with the occasional rally.”

And while Leide looks for the opportunity to ride one of these upticks higher, Tim Evans of IFR Pegasus in New York expects the grind lower to win out in the long run. Accordingly, Evans is 50% short November natural gas from $4.66 with a buy stop at $4.86 to limit his risk. He would ratchet down that stop to $4.79 should the market drop below $4.60.

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