With few fresh fundamental factors in which to sink their teeth, natural gas traders battled back and forth Friday, producing a wide 15-cent trading range. But despite the spirited session, the August contract finished with an unremarkable 0.1-cent decline and $2.933 settle, leaving plenty of questions still to be answered when trading resumes Monday. At 93,495, estimated volume was moderate to heavy for a Friday in July.

With fundamental traders mostly on the sidelines ahead of the release of updated weather forecasts this week, the market was dominated by technical trading Friday. Since notching a $2.76 low back on July 11, the August contract has been repeatedly thrust lower by short traders anxious to trigger the sell-stops that are believed to exist just beneath that level. Friday’s session was no different.

After gapping higher to open at $2.98 following a very strong over-the-counter market, the prompt month free-fell down to $2.83 in the first 50 minutes of trading. However, just like other forays toward the $2.76 level, Friday’s move lower was cut short by scale-down buying interest. The market turned up at about 11 a.m. EDT Friday and worked its way higher throughout the rest of the session. “To rally 10 cents off the lows like we did [Friday] was constructive,” said Nymex local Eric Bolling. “Add that to the series of higher lows and higher highs we experienced last week, and I wouldn’t be surprised to see a short covering rally into the low $3.00s [this] week.”

However, Bolling was quick to temper that statement, adding that a failure at the pivotal $3.02-03 level could lead to another retest of support down at $2.76. “That [$3.02-03] area is where we broke down from [the prior week], and it looks like there is going to be some good resistance up there. If they are able to jump over $3.05, that would lead the short-term trend into the low $3.10s. If we do come up there and then trade off, [the market] will make that push down to $2.75, just to see what’s down there.”

Looking further out on the horizon, Tim Evans of IFR Pegasus in New York remains bullish for fundamental and seasonal reasons. “While we still consider natural gas overvalued by historical standards, we also have to respect its upside seasonal prospects. August heat, the threat of hurricanes during the heart of the storm season and hedging interest for winter heating demand may be enough to put teeth into an upward correction at some point,” he wrote in a note to customers Friday.

In daily technicals, Evans sees resistance first in the $2.99-3.02 area, followed by more selling likely at $3.09. On the downside, support exists at Friday’s $2.83 low ahead of the aforementioned $2.76 floor.

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