After settling near the day’s high on Monday, May natural gas futures wasted almost no time in reversing their course on Tuesday. After peaking at $7.39 in morning trade, the prompt month spent the rest of the session exploring lower, reaching a low of $7.085 just before settling at $7.094, down 21.5 cents on the day. With the recent uptrend now broken, some market experts believe that $7 futures might not be around much longer.

The settle was the lowest the May contract has been since March 11, when it closed at $6.885. The petroleum complex on Tuesday also recorded significant losses, with May gasoline and heating oil dropping 1.6 cents and 2.18 cents a gallon respectively. May crude also plunged $1.85/bbl to settle at $51.86/bbl, a far cry from the $58.28/bbl all-time high that was notched on April 4.

Despite the similar directions, some market experts said petroleum only played a bit role in Tuesday’s natural gas decline. Commercial Brokerage Corp.’s Ed Kennedy said that while crude was “good background noise,” natural gas came down all by itself on Tuesday. “Natural gas broke down, retested its breakdown level, and now we are going to be seeing the low $6.90s here very quickly,” he said.

“We broke down on the uptrend for the bull market last Friday. On Monday and Tuesday, we are in the process of taking some short-covering to retest the breakdown level, and guess what we found on the highs Tuesday? Selling,” Kennedy said.

Looking at the market’s next move, Kennedy said now that the uptrend has been broken, he sees $6.92 as the next level followed by $6.78. He added that bullish factors have all but disappeared.

“There is no shortage of crude, and natural gas ended the storage withdrawal season with a goodly amount of gas still in the ground,” he said. “In addition, there is no weather to speak of anywhere. There are highs in the 70s [in many markets]. No AC [air conditioning], no heat, open up the window and air out the house. What other factors are out there?”

Figures from the National Weather Service (NWS) support Kennedy’s climate view as temperature forecasts show less need than normal for any type of heating use. The NWS predicts slightly above normal accumulations of heating degree days (HDD) for the Mid-Atlantic, but much below normal tallies for the industrial Midwest. For the week ending April 16, the NWS expects the Mid-Atlantic states of New York, New Jersey, and Pennsylvania to see 128 HDD, six above normal and the East North Central states of Wisconsin, Illinois, Indiana, Michigan and Ohio should experience only 73 HDD, a whopping 52 below normal.

Both sections of the country will be at or well off the pace for even a typically mild April. At the weekly HDD rates above, the Mid-Atlantic should be slightly above its normal April of 496 HDD. The 73 HDD weekly sum for the East North Central, however, is well below the 510 normally accumulated in April, according to NWS figures. The monthly norms are based on a 1971-2000 average.

The below average accumulations of HDD are significant, for the industry already stands at a hefty working gas storage level of 1,249 Bcf, or 218 Bcf greater than this time last year and 227 Bcf more than the five-year average. Thus just to get to a start-of-winter average of approximately 3,100 Bcf, reductions of 7 Bcf per week will be necessary to bring inventories into alignment with historical norms.

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