Following a nine-week sideways consolidation period, natural gas prices finally broke lower Monday, as traders continued to price in the impact of increased production in a slowing economy. A gap lower open for the June contract set the tone early and the bears responded with a steady stream of selling throughout the session, delivering the prompt month to its lowest settle in five months. At the closing bell, June was 17.2 cents lower at $4.695.

For technician Ira Hochman, the bulls had their chance to reverse the sell-off yesterday. “For a good while [Monday] we were not too far of the day’s high at $4.80. We needed to retest the highs and get close above the day’s midpoint at $4.75. That would have created a neutral day on the charts, which would have been something for bulls to potentially build on,” he said.

However, in light of the fact the market closed beneath $4.75, Hochman is bearish for at lease another 20 cents. “This thing is now poised to test $4.50,” he reasoned.

Looking ahead, it does not look like bulls will get much help from fundamental factors this week. Above normal temperatures forecast beginning this weekend in the northern half of the country will minimize heating demand while southern states can expect minimal electric cooling demand from expected normal mercury readings.

To make matters worse for bulls, the market will likely see another in a string of bearish storage reports when the American Gas Association releases its weekly report Wednesday. Expectations ahead of that report are looking for a net build of 40-80 Bcf, well more than last year’s refill of 32 Bcf and at least double the 5-year average injection of 20 Bcf. New York-based Lehman Brothers backs its 70 Bcf injection estimate by pointing to National Weather Service degree days data that show last week was 22.7% warmer than normal, and 32.9% warmer than the same week last year.

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