Continuing its sell-off from last week in search of support, the July natural gas futures contract came close to breaching the $6 level in early afternoon trading before closing at $6.207, down 5.4 cents on the day.

The contract’s low on the day of $6.08 was the lowest July futures has been since May 3. While crude and gasoline futures on the day rose 17 cents and 2.35 cents, respectively, many still pointed to a tight, but unexplainable relationship between the energy markets.

“I always love the synchronicity of these things,” said Ed Kennedy of Commercial Brokerage Inc. “We tested support in the gasoline and it held. Right after we tested support, gasoline bounced back a little due to two cat crackers [plants that refine crude oil to produce gasoline] that went down in Pascagoula, MS and Corpus Christi, TX. Gasoline rallied, crude rallied, and of course natural gas rallied.

“I think there was a reasonable expectation of short-covering after that huge move in all of the energies last week. So what we are doing here, is we are going to start a consolidation just above the major trends,” Kennedy said, noting that markets go from no price control to price control, regroup themselves, and then go to no price control again. “In other words, the natural gas futures market is going to consolidate and decide in what direction the next move is. But it is doing it at key levels in all of the energies.”

Over the next week, Kennedy said he believes the industry is going to find out what direction the energy markets will head. As for the possibility of falling below the psychological $6 mark, the broker said that while the market could go below $6, it might not mean anything if there is good support in the key $5.80 area. “Despite the fact that all of the energies are intertwined right now for all of the wrong reasons, they are still intertwined,” he said. “We are going to have to watch them all.”

Cynthia Kase of Kase and Company said on Sunday that she expected natural gas prices would continue to remain below resistance and attempt to break the $6.20 support to test the critical $6.10 level, which had been adjusted downward to $6.06.

“We can envision one of two scenarios taking place if $6.06 definitively breaks,” she said. “The first is that prices will struggle though the $6.00 level and have a hard time working down through the $5.90’s, but eventually will decline to $5.60 or so.

“Alternatively, if $6.06 and then $6.00 is broken rapidly, with prices declining right to the $5.90 area, odds increase for a precipitous fall all the way down to the $5.30 area,” Kase said.

In observance of the national day of mourning for former President Ronald Reagan, the New York Mercantile Exchange Inc. announced Monday that it will close its markets, including those offered on its electronic platforms, on Friday.

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