Bringing the consecutive down-day streak to seven, June natural gas futures on Friday reached a low of $6.490 before settling at $6.555, down a quarter on the day and $1.661 lower than the contract’s close the previous Friday. During the eventful week, May futures expired on Wednesday at $7.198.

While some had expected a round of short-covering and consolidation on Friday, the market seemed to still be digesting the bearish natural gas storage injection Thursday, which was compounded by the 10 Bcf revision higher of working gas stocks for the week ended April 14.

Thursday’s release of inventory data showing an 80 Bcf injection for the week ended April 21 and a 10 Bcf upward adjustment to the previous week’s volume did not catch many traders by surprise. June natural gas futures traded lower in Wednesday night Access trading as rumors of a bearish natural gas storage revision swirled throughout the industry. The rumors turned out to be true as Dominion and CenterPoint Energy both confirmed revisions to their April 14 submissions.

“We really have given up everything that we had gained in the move up,” said Steve Blair, a broker with Rafferty Technical Research in New York. He noted that the June contract has shed $1.855 over the last seven consecutive regular sessions.

“We broke through to the upside the previous week and now we have come back into the market’s comfort zone of $6.50 to $7.50,” he said. “I would not be surprised to see a further break towards the $6 level. I don’t think we will get through it, but the 90 Bcf net injection — which includes the revision — for the week ended April 21 just further highlights the fact that current storage levels are more than comfortable.”

Blair said he believes the next price move really depends on the weather. “My view is unless we get an early heat wave in the Midcontinent or the Northeast, prices are going to have a limit to the upside. If we have delayed summer heat, then prices could venture to $6 or below.”

Market technicians see little help for the bulls. When prices (two weeks ago) surged over $8.00 it marked the end of the preseason rally, which began when spot futures traded as low as $6.450 on March 8, according to a top technical analyst. “[It’s] pivotal resistance was $8.260 as the likely conclusion of the seasonal rally from the $6.450 low,” said Walter Zimmerman of United Energy. Prior to Friday’s session, he added that market support was at $6.840 and Thursday closed decisively below $6.840 ($6.805) and looked like it was headed lower Friday.

“The bulls have suffered a major one-two punch over the past two weeks,” Zimmerman said. “[The previous week] gave the decisive failure at key resistance and now Thursday gives the decisive break down below key support. If history is any guide, then spot could now fall as far as the $5.630 area by late May.”

Sub-$6 gas or not, Tom Saal of Commercial Brokerage in Miami suggests to end-users that they “step up to the plate and lock in prices for the injection season.” He points to the near-term futures as testing long-term support when the market rallied from $6.47 in early March and $6.65 in early April.

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