After teeter-tottering above and below the $7 mark for the past two sessions, May natural gas futures on Friday once again broke beneath the psychological level to settle at $6.997, down 7.2 cents on the day and 24.5 cents lower for the week.

The weekly decline marked the second consecutive significant week-to-week drop. As a result, May natural gas has fallen 75.2 cents over the past two weeks.

“While crude was pretty active on Friday, I don’t think natural gas was nearly as busy for most of the session,” said Steve Blair with Rafferty Technical Research in New York. “Natural seemed pretty quiet. I think the only reason you even saw this little rally at the end of the day was probably a little short covering for the weekend.”

May crude and heating oil also resumed their courses lower on Friday after a one-day hiatus. Crude settled 64 cents lower at $50.49/bbl, while heating oil was down 2.24 cents to close at $1.4599/gallon.

“We are still well above our major support number at $6.80, which I think the market is probably going to defend pretty well unless we see a big drop in the petroleum sector,” Blair said. “I wouldn’t say we are trending lower, but I would not be at all surprised to see the market get down near that $6.80 level. I think the market is currently trying to find a little bit of direction.”

If the May contract gets through the $6.80 figure — which Blair doesn’t expect it to — he also sees major support at $6.55.

Thursday’s fooled local and short-term traders into thinking that once the Energy Information Administration (EIA) storage injection figure was released, prices would head lower. The 44 Bcf injection for the week ended April 8 was inline with trader expectations, but by the time trading ended the market failed to continue the pervasive downtrend, and local traders had to do a quick re-assessment.

“As soon as the injection number came out, the locals got short, but when prices failed to follow through to the downside, they had to scramble to cover,” said a New York floor trader. He said that what appeared to be a bearish number head-faked the locals into selling. “Fund buying was light, but even with Thursday’s advance I think the market is poised to trade lower.

Although near-term weakness may currently be in the cards, other analysts see looming long-term strength if for no other reason than funds and managed accounts have not really bought into any strong bearish rationale. “The distant contracts should maintain sizable premiums,” said Jim Ritterbusch of Ritterbusch and Associates. He added that while such a weak spread curve would normally imply major market weakness, he believes the likelihood of a price collapse is currently being curtailed by a lack of aggressive long liquidation from the hedge funds. “We estimate that the funds are currently about flat or balanced within the market and will be anxious to establish a counter-seasonal long position on evidence of sustained price support,” he said.

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