Natural Gas futures tumbled late in the trading session Tuesday,breaking momentarily below major support at $1.945, before settlingat $1.951. The nearly 15-cent slide exhibited by the Augustcontract comes on the heels of a nearly 3-week decline, leavingmany traders wondering if Tuesday’s big move lower was the end ofthe downtrend or one just picking up speed. Estimated volume of106,004 contracts favored the later.

Cash prices lagged behind futures for a second day in a rowTuesday. A Midcontinent marketer admits the cash market will comeout offered lower this morning, but feels cash will continue to bethe key behind a possible reversal. “The magic word ‘value’ came uptoday when prices dipped below the $2.00 level, and why not? WithAugust Midcontinent basis at 7.5-8.5 back [off the futures price],you can lock in sub-$1.90 gas for the entire month of August.”

However, the fundamental picture could become even more bleaktoday upon the release of the AGA storage report. Preliminaryestimates are calling for a refill on the order of 70-90 Bcf. Ifrealized, a report of that magnitude would easily eclipse the 58Bcf injected into the ground this week last year adding to theoft-quoted year-on-year surplus.

If the market does continue lower, the August will encountersupport in the $1.94-945 area ahead of the $1.915 low reached June10th on the continuation chart. Minor resistance rests at $2.00with more selling clustered at the small chart gap on the dailychart at $2.08-09.

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