Continuing the downhill slide from where the now-expired July contract left off on Monday, the August natural gas futures contract sloughed off another 8.3 cents on Tuesday to close at $6.118.

The newly minted prompt month fell to $6.09 in afternoon trading, coming very close to testing the psychological $6 mark. The July contract on Monday completed its run as prompt month in an undeniably bearish fashion, slipping 21.2 cents to close at $6.141.

“I thought we would rally a little bit better [Tuesday] than we did, but we have been looking for lower prices,” said George Leide of Rafferty Technical Research in New York. “We left two gaps on the downside on the previous two days, which is very ugly as far as the chart formation goes.” Specifically, Leide was referring to the gaps lower on Friday’s and Monday’s daily charts.

“I am expecting over the intermediate term to test down around $5.87-5.96 and then down to around the $5.65 level,” Leide added. “I’m expecting we will get a bump up, but we probably won’t trade above $6.38 or so. As long as it stays below that level, I would expect us to hit the lower prices I mentioned.”

Tim Evans of IFR Energy Services said the ongoing decline in the petroleum complex and a lack of pressing air conditioning demand has allowed the natural gas market to probe the lower reaches of its recent price range. August crude futures dropped 58 cents on Tuesday to close at $35.66.

“August natural gas has fallen as far as $6.09 and we see it finding some technical support from here through the $6.025 low of June 9 and the $5.96 spot floor set on the same date,” Evans said. “A break of that support and the downside may expand somewhat, with longer-term support scaling in at $5.70 and $5.50 as the possible objectives.”

Evans said he sees potential for the slide to continue as 90-100 Bcf build estimates for the EIA’s Thursday storage report exceed the 82 Bcf five-year average benchmark. “Slightly below average temperatures for the current week suggest a further easy accumulation of stocks, although the July 4th holiday doesn’t fall into the same week as it did last year and before, so there may be some potential to spin a further healthy injection into something more supportive,” he said. “Overall though, we continue to see natural gas having the heat and hurricanes of the long-range forecast that would allow the market to divorce itself from the petroleum complex, at least for now.”

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.