Despite their success in keeping the market in negative territory for most of Thursday’s trading session, natural gas bears had very little to show for their efforts. Since plummeting 13 cents in the minutes following a larger-than-expected storage injection Wednesday, July natural gas futures have actually gained ground, with prices rising late Wednesday and then hanging around the $3.80 level yesterday. Although the change column shows a 1.1-cent decline for the day, it belies the market’s inability not only to test support at $3.67, but also to make a lower-low on the day.

With fundamentals largely unchanged yesterday, traders turned their attention to the technical side of the price equation. On the downside, July has support at yesterday’s low of $3.75 ahead of Wednesday’s post AGA dip to $3.73. A break beneath these levels, would put pressure on the May 30 low of $3.67. Further buying is seen at last July’s spot low of $3.61, according to Tim Evans of New York-based IFR Pegasus.

On the upside, Evans admits the charts are pretty straightforward at the moment. “The $3.90-96 span provides the nearby pivotal resistance and then there is a second tranche of selling from $4.13 through Tuesday’s $4.179 high that also encompassed the downtrend off the mid-April highs. July needs to clear these levels to turn the intermediate-term trend higher and drive off the large volume of fund shorts.”

Evans is currently 50% short July natural gas from $3.87 with a $4.01 buy stop to limit his risk. He looks to add to that exposure if the market is able to break to new lows (below $3.67).

©Copyright 2001 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.