Following Thursday’s wild down day, June natural gas futures used Friday to steady the ship by trading within a fairly narrow 11.5-cent range. However, the prompt month was able to maintain most of its work lower, reaching only a $6.55 high on the day.

After reaching a low of $6.435 in Friday’s regular trading session, June natural gas ended up settling at $6.536, up 2.5 cents from Thursday’s close but down 8.5 cents from the previous Friday’s settle. The $6.435 is the lowest a prompt month has been since the April contract reached $6.42 on Feb. 25, 2005.

It appears that June natural gas is finding comfort in the lower end of its mid-$6.40s to mid-$6.70s range due in part to the fact that June crude is still trading sub-$50/bbl. The $50/bbl mark has long been seen as a major psychological level for crude. On Friday, June crude settled up 13 cents at $48.67/bbl.

Calling it “a quiet close to a bearish week,” IFR Energy Services’ Tim Evans said, “June natural gas has left the overnight low at $6.43 in place as light short-term support for prices, but the market is really teetering here, and declining channel support at $6.20 is approaching the longer-term support from January and February in the $5.71-6.11 zone. That’s where we think the market is headed over the intermediate term, and then possibly lower.”

On the upside, Evans said if June was able to get past failed support at $6.585-6.60, he views the $6.68-6.70 area as a further obstacle to reviewing the $6.84 high from Tuesday or the downtrend resistance now falling through $6.90.

Other analysts noted that the natural gas futures market is approaching key technical support levels. “This market is still in a downtrend, the fundamentals are bearish and all rallies should be sold,” said a broker with ABN AMRO in New York. He admitted that the natural gas market can be extremely vicious in its price moves, but “this time it has had an orderly up move and an orderly down move. In the past it has shown a lot more volatility than it currently has and it has been like a stair step down. I thought the move down would be more violent than it has been,” he said.

“My sense is that the market will trade a little lower down to $6.20,” the broker added. He said prior to Friday’s session that it was important for the market to settle below a double bottom at $6.45, which it was not able to do.

Other traders aren’t so sure that there is much room lower before the buys come in. “I’m not convinced that the market is headed lower. It needs to break support levels at $6.45,” said George Ellis of the Bank of Montreal in New York. Ellis said that for the market to demonstrate that it was indeed headed lower, a settlement below $6.45 in the June futures was necessary. “In the meantime, I would be a buyer with close stops [stop loss orders]. There is no reason not to believe that support will not hold again,” he predicted.

In either case the current fall in natural gas and petroleum prices is good news for an economy already showing strength. The dollar headed for its biggest weekly gain versus the yen in more than four months and traded near a six-month high against the euro on expectations that the U.S. economy will outperform those of Europe and Japan. In addition, a government report showed Thursday that retail sales rose 1.4% in April, twice the median forecast from a Bloomberg survey of 69 economists.

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