Following strong bullish moves on Wednesday and Thursday, July natural gas futures on Friday kept the upward pressure on, but relaxed a bit range-wise, trading within a slim 11.5-cent corridor.

After reaching a high on the day of $6.925 in morning trade, the prompt month zigzagged for the rest of the session, giving a much needed breather after Wednesday’s 41-cent spike and Thursday’s $7.02 high. July natural gas ended up finishing Friday at $6.88, up 6.1 cents on the day and 51 cents higher than the previous Friday’s close.

Petroleum futures put in another strong day Friday with prompt-month crude settling above $55/bbl for the first time since April 26. July crude settled $1.40 higher at $55.03/bbl, while July heating oil and July unleaded gasoline closed higher by 5.73 cents and 4.17 cents at $1.5995/gallon and $1.5571/gallon, respectively.

“The rally on Wednesday destroyed the technical downtrend, and it is likely that a number of trading programs key off the close,” said a Washington, DC broker. “Thus the strong close on Wednesday prompted further buying on Thursday and sent the July contract as high as $7.02.”

Prior to Wednesday’s huge advance, traders could point to a consistency between technical factors (the pervasive downtrend) and negative short-term fundamentals such as mild weather and abundant storage. “The picture for natural gas has become unglued,” said the broker. He pointed out that there is a lot of supply in the short run countered by a lot of anxiety in the long run. “We are not selling the market, we recommend that only for day traders. We are buyers on dips,” he said.

He noted that the July contract surged through the technical downtrend line when it raced through $6.55. Buying in that area could be effective for “there is a lot of support in that area in the July contract going back to the beginning of the year.” Whether the July contract will see $6.55 again may be in doubt, for “all our momentum indicators are pointing higher,” he admitted.

Other technicians are studying the broader decline of the July contract and see futures ultimately heading lower. The big question is whether the precipitous decline of July futures, which peaked on April 4 at $8.04 and then declined to a May 26 low of $6.13, will continue and bring still lower prices.

“Thursday rallied 23 cents to a $7.02 high, then fell 20 cents to a big potential topping pattern on the daily chart,” said Walter Zimmerman of United Energy. He added that this action suggests that the rally from the May 26 low either peaked at $7.02 or is about to peak.

Zimmerman views the surge of Wednesday and Thursday as part of a corrective pattern to the major downtrend in place since April 4. Thus once the corrective pattern is completed, the trend to lower prices is likely to continue. In the parlance of technicians, the correction is likely to take an “A”, “B”, “C” format with the current wave A (up), followed by a B wave down, and another C wave up. “We count the May 26 rally to $7.02 as the initial (A) wave up of the (ABC) bear market correction of the April 4 to May 26 spot decline,” he said.

Savvy traders like Zimmerman always have a point at which they are willing to call themselves wrong. “It will take a decisive close above $7.190 in the July contract to turn the near-term outlook favoring higher prices,” he said.

Fundamental traders who closely monitor economic data received a cautionary flag. The Labor Department reported Friday that employment increased by 78,000 jobs, but according to a Dow Jones report, analysts had been expecting growth of 186,000.

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