The bears didn’t waste much time Tuesday evening. Minutes after Claudette was downgraded to a tropical storm, traders took the bull by the horns and were able to steer prices in overnight Access trading below key technical and psychological support at $5.00. When the regular, open-outcry session opened Wednesday morning, there was little question which direction prices were headed.

Locals were the first sellers as they hunted for sell-stop loss orders in the $4.90s. By the 11:45 a.m. EDT, the market had plumbed new six-month spot market lows at $4.82. August closed down 8.6 cents for the day at $4.934.

Though Claudette was never a real threat to the bulk of Gulf Coast gas production, her path and intensity was enough to keep traders from shorting the market too hard early this week. That all came to an end Wednesday when waves of technical and fundamental selling push prices to levels not seen by a prompt contract since early this year.

Adding to the price weakness of gas Wednesday was the crude oil market, which dropped 57 cents to close at $31.05. “The decline [in crude oil] helps natural gas maintain its discount to the falling heating oil price, a necessity if natural gas is to lure consumers back to this fuel,” wrote Tim Evans of New York-based IFR Pegasus in a note to customers Wednesday.

Also weighing on prices Wednesday were concerns that Thursday’s storage report would bring about another wave of selling. Last Thursday the market dropped 26 cents after learning that a sizable 111 Bcf was injected into underground storage facilities during the week ending July 4. Looking ahead at today’s release, most market watchers and traders call for an injection in the 90-100 Bcf range. If realized, a number of that magnitude would be bearish, easily eclipsing the year ago injection of 69 Bcf as well as the five-year average of 76 Bcf.

And while bears appear to have storage in their corner, the technical pictures has turned mixed. Though long-term charts now point down, the combination of the large number of shorts prevalent in the market combined with the market’s inability to continue in any one direction for an extended period of time point to the potential for a rally ahead of the weekend. “On the upside, reversal through $5.05 would target the $5.20 high from Tuesday, the $5.38 downtrend resistance or even the $5.64 high from July 9 as possible targets,” Evans continued.

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