After making a pit-stop on Wednesday, December natural gas futures continued to trend lower again on Thursday. December natural gas futures hit a low of $7.13 before crawling back up to settle at $7.236, down 44.2 cents from Wednesday’s settle.

The sell-off appeared to coincide with similar declines in the petroleum complex. December crude marked a low on the day of $47.10/bbl before settling at $47.42/bbl, down $1.44, while heating oil notched a low of $1.3550/gallon, before closing at $1.3638/gallon, down 3.91 cents from Wednesday’s close.

“My range of $7.68 to $7.75 sure stood up as resistance on the upside here,” a Washington, DC-based broker said. “That old trading adage that former support becomes resistance really played out today. We made that run up there Wednesday and just couldn’t penetrate through it, then just flushed it all away here in Thursday’s session.”

The prompt month on Wednesday notched a high of $7.73. As to what brought futures down hard on the day, the broker pointed to crude’s influence and the fact that natural gas futures couldn’t get excited and push through that $7.75 level. “At some point the buying pressure gets weak and anyone who has been long in that little rally gets scared about their position and bails on it,” he said.

“As for crude, we practically paralleled its movements [Thursday],” he said. “This huge move up we had in crude and natural gas on Wednesday has definitely been negated. I would say that the natural gas futures market is back to a very weak position. In looking for support, I would keep my eye on the $7.00 to $7.04 range.”

IFR Energy Services’ Tim Evans agreed that natural gas futures appeared to be taking cues from its petroleum counterparts. “Wednesday’s rally in natural gas prices was at odds with the larger-than-average and larger-than-expected build in DOE storage, taking much of its strength from the rebound in heating oil prices as something of a ‘me too!’ advance,” he said. “With crude and heating oil turning lower again today, that excuse was removed and prices here have resumed their intermediate-term downtrend.”

Evans noted that the drop below Tuesday’s $7.28 low confirms that December natural gas is still in a downtrend from the $9.505 peak set back on October 27. “The next significant support we see stems from the failed December resistance at $6.92, then prior spot support at $6.505, then the $5.93 December floor from back in September,” he said. “Failure to catch itself somewhere within that broad range could leave the downside open to include the $4.52 spot low from September.”

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