Adding to a string of losses that would give even a Nasdaq bear cause for celebration, natural gas futures funneled lower last week as traders continued to factor in the impact of seemingly plentiful gas supply in a market that currently lacks much of a seasonal demand component. Taking over where the May contract left off, June closed 7.3 cents lower on Friday at $4.867. With that the June contract continued the trend, adding to its week-long string of losses.

Several sources were surprised by the market’s inability to rebound ahead of the weekend. Since notching a $5.60 high on April 16, the June contract has lost more than 13% of its value while moving higher in only one out of eight trading sessions. For that reason, market-watchers did not rule out the chance for a short-covering rally on Friday. As it turns out, that was not in the cards, as traders elected to demote prices again Friday, delivering the June contract to the lowest level for a prompt month at Nymex since November.

While many traders expect that rebound to come this week, there are those that point to increasingly negative technical factors along with less-than-supportive storage expectations as reasons fueling a further decline. According to Lehman Brothers, the American Gas Association will likely announce a 65 Bcf injection this week, versus a 32 Bcf injection last year and a 44 Bcf five-year average refill. Meanwhile, technicians note that by settling at $4.867 Friday, the June contract is on the verge of breaking beneath trendline support in the $4.85-87 area.

For Tim Evans of New York-based IFR Pegasus, June has layers of resistance at $4.92, $5.00, $5.05 and $5.10. On the downside, support is seen at $4.80 and $4.60 ahead of the $4.38 spot low from last October.

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