After failing to reach Monday’s high despite an early-morning Access session rally, the natural gas futures market ground lower Tuesday as the midweek doldrums again favored bears. The May contract closed at $5.108 down 2.6 cents in a session that only saw only 47,344 contracts change hands.

With the exception of last week’s April Fool’s Day uptick, Tuesdays at Nymex have been dominated by natural gas bears as of late. In fact, the average decline in prompt month natural gas futures over the past six Tuesdays is a whopping 16.6 cents, proving that in the absence of fresh fundamental data — either weather or storage — prices have trended down.

Had it not been for gains in the early morning Access-only trading session, yesterday’s losses would have been more severe. Buoyed strength in East Coast cash prices, the futures market extended to a $5.22 high just before 9 a.m. EDT Tuesday. However, the market failed to equal Monday’s $5.25 high, and sellers were quick to punish this shortfall when the regular outcry session opened at 10 a.m.

Chilly temperatures across the eastern half of the country were also seen as a supportive factor as market-watchers continue to question the market’s ability to inject gas into storage facilities. Expectations for last week’s storage data center around an injection between 5 and 20 Bcf, which would fall in line with the 14 Bcf five year average. Last week the market stored 37 Bcf in the ground and last year at this time the market experienced a 9 Bcf withdrawal.

Citing the cool temperatures both this week and last, Tim Evans of IFR Pegasus in New York does not rule out a small withdrawal in both this and next Thursday’s storage release. “We’re looking for 10-20 Bcf in net withdrawals in Thursday’s DOE report and perhaps another 10-20 [Bcf next Thursday] based on the current heating degree day forecast. This should be enough to at least keep the shorts on their toes.”

And while Evans believes that nuclear plant outages, early cooling demand, and concerns over hurricane season will eventually propel the market higher, he recognizes that the bull market is not yet upon us.

However, the time is now, says technician Craig Coberly of GSC Energy in Atlanta. “[Monday’s] open gas us two strong bullish signals; the gap above the declining upper wedge line and the gap above the ‘broken’ support line,” he wrote in a note to customers Tuesday morning. “These features, plus others, provide enough evidence for a high confidence conclusion that the decline from the February high is complete. Now the outlook is for gas to move higher for at least several weeks.”

Specifically, Coberly points to 38%, 50% and 62% Fibonacci retracement levels of the February to April decline at $6.33, $6.77, and $7.22 respectively as upside objectives. Only a break below $4.88 would prompt him to re-evaluate the market’s upside potential.

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