Continuing to scratch new lows as it approaches expiry, the September natural gas futures contract in overnight Access trading and the regular session Tuesday carved out lows of $5.25 and $5.26, respectively, the lowest the contract has traded since Feb. 25, when it notched $5.22.

Despite making a run Tuesday afternoon to log a high of $5.38 on the day, the prompt month fell back to close at $5.338, squeaking out a 2.8-cent gain on the day. October futures gained nine-tenths of a penny to settle at $5.475.

Many traders polled by NGI had suspected that last week’s low of $5.33 would be a launching pad for a move upward. However, it appears that Monday and Tuesday’s activity might leave room for a further decline.

“We have an erosion process here,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “There is no bullishness at all in the fundamentals anymore, not that there ever was, it was mostly hype. Traders on Tuesday took the winter months down more than the front end, but what we found in the winter months was good strip buying.

“Crude is on the teeter-totter here,” he added. “It penetrated $45 today, but bounced right back, so that is not a confirmation of any lower prices yet. If crude starts to weaken up, we will probably get some more selling in nat gas.”

Looking at support levels for natural gas, Kennedy said he is looking at $5.12 and the general $5 area.

Summing up Monday’s action, Craig Coberly of GSC Energy in Atlanta said, “Gas failed to confirm a bullish case on Monday and the bearish case was reconfirmed by Access trade. This price action says the intermediate and short-term trends pointed lower.” On the downside, Coberly put lower support and objectives focus on the $5.13-5.20 level, followed by the $4.89-4.92 and the $4.51 areas.

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