Traders who cut away early to start the Memorial Day weekend might be surprised when they get back as June natural gas futures dropped significantly lower Friday, recording a low of $7.525 before settling at $7.640, down 4.1 cents from Thursday and 30.4 cents lower than the previous Friday’s close.

The venture lower Friday was somewhat of a surprise as many had expected a quiet session ahead of the long weekend, with the fireworks actually occurring during Tuesday’s expiration of the contract. The impressive down-day Friday also brought the string of consecutive closes lower to six days and a loss of 43.5 cents.

“There was about an hour or so of trading on Friday that was breathtaking. It was like the old days,” said a Washington, DC-based broker. “We haven’t seen anything like that in an awfully long time. I don’t know what to make of the rebound just after 2 p.m. EDT, but I would attribute it to short-term traders being excited that there was actually profit to take…so they overdid it.

“I really think we are heading back into a period of much more intense trading activity. Despite the holiday approaching, we did more natural gas business Friday than we have in weeks. I’m sure there were people missing ahead of the holiday, but it did not seem to affect my business. The market is ready to break out, and I think it is headed lower. In order to change my mind on that, we would need to get back above $7.720.”

The broker noted that the market is due to make a move. “We have been trading within a tighter and tighter range, and Friday’s action might have been the beginning of that breakout,” he said. “While we are still stuck in a range from approximately $7.500 to $8.230, the charts tell a different story. Looking at the June chart from back on Jan. 18 with a low of $6.529, we have had a wonderfully solid upturn line ever since with four or five points on it. We broke that line briefly on Thursday and we closed well underneath it on Friday.”

Citigroup analyst Tim Evans said he really did not expect much activity to occur Friday. It seemed like people had already headed for the beach or the golf course, Evans said. “Natural gas futures also were able to ignore the petroleum rally on the day, choosing instead to mind its own business,” he said.

Ignore petroleum indeed. While weakness prevailed in natural gas, July crude closed out Friday $1.02 higher at $65.20/bbl, and June gasoline gained another 4.68 cents to peg the per-gallon price at $2.4037.

Looking ahead, Evans warned of some potential bullish roadblocks to further natural gas futures losses. “The official start to the hurricane season is coming this week and we are also coming up on some anniversary dates from last year,” he said. “From June 10-14, 2006, our first — and just about only — tropical storm came through the Gulf of Mexico, so people understand the potential for something to blow up could be right around the corner.”

Some top traders suggested the die is cast for lower prices. Technicians said the $8.230 high reached in May 18 trading was the end of the preseason rally often associated with natural gas prices. “This has been a terrible couple of weeks for the bulls. [The previous week] failed precisely at our long-standing candidate for the preseason rally peak at the $8.230 level,” said Walter Zimmerman of United Energy.

Technicians like to see confirmation of their assessments and “the bears needed a decisive decline to confirm the bearish message of [the previous] week’s reversal,” said Zimmerman The bears appeared to get their decisive down week.

Even hardcore bulls are having difficulty. Phil Flynn of Alaron suggested Thursday before the market opened to maintain a long position in July futures established at “approximately $8.02” and to leave the stop loss order at $7.95. July futures settled at $7.850 Thursday and at $7.795 on Friday.

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