Putting in a second “weak” trading day that had some market experts rumbling about an established top, May natural gas futures on Tuesday traveled no higher than $7.585 before settling at $7.572, down 2.2 cents on the session.

With continued weakness in the petroleum complex and warmer than normal temperatures in some of the major heating markets, bulls on Tuesday were looking for something to hang their hats on. Showing some signs of support was the fact that the prompt month was able to rebound after notching a $7.48 low late in the trading session.

“The natural gas market continues to look vulnerable to a further decline as it has eroded some of its nearby technical support and seems to have a questionable nearby fundamental foundation as well,” said Tim Evans of IFR Energy Services. He noted that temperatures have warmed to normal or above seasonal levels in much of the Midwest and Northeast.

“May natural gas is grinding away at nearby support in conjunction with the prior highs at $7.51-7.52 and the psychological support at $7.50,” he said. “Slippage past this point would put the $7.30 uptrend support under pressure, followed by the $7.06 floor from March 28. The weekly spot continuation chart suggests the long-term uptrend support at $6.27 as the next major objective should the market confirm such a larger-scale reversal.”

If the advance is renewed, Evans said he sees minor resistance overhead in the $7.66-7.68 area, with the $7.904 high from Monday and rising channel resistance at $8.00 up next. If the market can either hold the $7.50 mark or the $7.30 uptrend line, Evans said the $8.23 secondary spot high from late November could also become “a target” for May over the intermediate term.

Looking at Monday’s open outcry trading session, GSC Energy’s Craig Coberly said he did not see the upside follow-through he expected. “This casts doubt on the outlook for a rally into the $8.13-8.23 area and again opens up the possibility the rally has peaked,” he said in his Tuesday outlook. “In fact, I’d place the odds slightly on the side that a top has been made.”

Coberly said May would have needed to trade above $7.85 on Tuesday in order for him to say the trend is still up. However, he noted that the prompt month would have had to close below $7.52 to “give us good evidence trends have turned down.”

Advest Inc.’s Jay Levine urged market watchers to remember that it is never about the current supply/demand balance, it’s about the future supply/demand balance and what the market thinks it will be.

“That’s what’s got this market all up in arms — and price — because we’ve seen the future (at least according to pundits via the media) and the future is bleak,” Levine said. “But, as much as could go wrong, there’s probably an equal amount which can go (or stay as the case may be) right. I agree, and have, that the risk was and probably still is greater up than down (particularly in natural) and have cautioned the many grizzlies in-waiting (and it wasn’t that long ago) to temper their bearishness because I didn’t see it that way. Now, the shoe seems to be on the other foot, with most looking for [still] higher prices — or so we’re told.”

Levine said Monday’s decline, after making new highs across the board, signaled possible reversals to the technical crowd. “Undoubtedly there’ll be those who will jump on any selling opportunity not to be left behind, but I’d be patient in the process because as far as we’ve come and as much future risk there might be, it wouldn’t take much to shave $5+ in crude and 50-75 cents off in natural — and still be historically, and I might add histrionically, high.”

Turning attention to Thursday’s release of the Energy Information Administration natural gas storage report for the week ended April 1, market experts are torn with whether the industry will see the first build of the season, or one last withdrawal. Last year saw a 15 Bcf injection and the five-year average for the week is an 11 Bcf withdrawal.

Citigroup’s Kyle Cooper said he is looking for inventories to actually be unchanged with an official estimation of minus five to plus five Bcf. “However, the various models are producing a rather wide range of estimates,” he noted. “That leaves confidence rather low. At this point, our inclination would actually favor a very small build over a small draw.”

IFR Energy Services’ Evans is calling for a 10 Bcf withdrawal. “This will likely mark the end of the withdrawal season though, and we expect to see some above average injections over the next two weeks or so that will pad the 205 Bcf year-on-five-year-average surplus to some degree,” he said.

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