After more than a $1 drop Monday and Tuesday, downward momentum in gas futures finally dissipated on Wednesday. In the morning it even appeared that the April contract was going to hold above $6, but bulls’ hopes were quickly dashed and the near-month contract ended the day down another 7.9 cents to $5.865, a far cry from the $8.50 high only eight trading days ago. The high for the day Wednesday was $6.115 but the low was $5.760.

“It looks like it could go even lower,” said George Leide of Rafferty Technical Research. “We’ve got some support at $5.75 and $5.63, but the market looks like it’s in further trouble here. We may see some bounces, but potentially we’ve got lower to go.”

However, Leide said it should fall slower through the $5s than it did through the $6s. “It’s a bit oversold. It’s come down a chunk already.”

He said if the market gets “really knocked around down here you may see something close to the $4.70-85 area. If this is just the middle of the down move, that’s a very viable area to look for. But it may not happen with April; it may happen with the May contract once that becomes spot.”

In order for the bull market to return, the near-month would have to fill the gap at $6.50. “That’s a long way up,” Leide noted. “But along the way, we may first have to develop something lower.”

There’s been no change in the bearish spring weather forecast. The National Weather Service’s six- to 10-day outlook on Wednesday showed the same picture of above normal temperatures for the eastern half of the country, including nearly all of the Upper Midwest but none of Texas, and below normal temperatures for the West, particularly the Southwest.

Although the weekly storage report could bring another large and potentially bullish number between 100 Bcf and 150 Bcf (most expect 120-145), some observers are saying that already has been factored into prices.

However, Eric Bolling isn’t among them. “We’re in a serious situation because of storage,” said the Nymex local. “I think the market needed a sell-off like this. It was a different situation in 2000 when we went to $10 and retraced all the way back down below $2. That was a squeeze. There were a lot of things that were not fundamentally bullish at that time. This is different. We are going to finish with a record low storage level. We are already $2 off [the April contract highs]. We’ve already gone lower. It could go a little lower, but I think the risk of shorting the market here is too great. I’m biased to the upside.”

However, Bolling admitted he’s been on the wrong side of the market lately. “I got absolutely destroyed today. My position over the last five trading days [went bad]. I was long on the run up, and I’ve taken it on the chin on the sell off.”

He said his spread positions went sour as the April-May spread closed in to as little as 6.5 cents Wednesday from nearly $3 in late February. “May has been virtually unchanged over the last three weeks. The price has ranged from $5.85 to $6.40 and we’ve been stuck in a range. April has been more than $2 over May and now it’s [almost] the same price as May.”

One thing potentially working in the bulls favor, Bolling added, is the end of the “roll-over period.” He noted that typically from the fifth business day of the month to the tenth business day, fund groups roll their spot-month positions into the second month to reduce their cash outlay and margin requirements. They sell the front month and buy the second month. With those sales dropping Thursday, Bolling expects prices may start to find support particularly in light of the storage report.

“If the EIA number is above 100 Bcf, I think over the next couple of weeks you are going to see some stronger prices.”

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