Following declines of nearly a dollar last week, the natural gas futures market shuffled sideways in lackluster trading Monday. With weather forecasts continuing to call for mild temperatures, bull traders had little on which to mount an offensive. Meanwhile, the possibility for a third-straight record-setting storage injection gas has bears looking for further price declines this week.

July closed at $5.706, up only 3.1 for the session, but within easy striking distance of Monday’s $5.72 high. At just 55,057, volume was light for the session.

Bull traders are still shaking their heads after last week’s deleterious turn of events. Other than a brief stabilization last Tuesday when Federal Reserve Chairman Alan Greenspan sounded the alarm over futures supplies, natural gas futures last week had the trajectory of a safe pushed out of a 10-story window. “Today’s bull is tomorrow’s bear. In just a few short days we’ve gone from just about everything bullish to just about everything bearish,” wrote Jay Levine of New Hampshire-based Advest in a note to clients Monday. “When all headlines scream bull, that often signals a top.”

Helping fuel the sell-off last week was another in a string of extremely large storage refills. According to the Energy Information Administration, storage increased by 125 Bcf to 1,324 Bcf during the week ending June 6. Combined with the 114 Bcf that was stuffed into the ground during the last week of May, the last two injection figures are the first and second largest refills in the nearly 10-year history of EIA data.

Looking ahead to this Thursday’s release, it may be three in a row. Early expectations are centered on a build of 110-130 Bcf, well above the five-year average injection and last year’s refill of 80 and 81 Bcf respectively. The bearish end of that range of expectations comes from Thomas Driscoll of Lehman Brothers who points to a low accumulation of heating and cooling degree days last week as an indication of the reduced demand.

In daily technicals, resistance is seen at $5.88 for July. Should that level hold to the upside, Cynthia Kase of New Mexico-based Kase and Company looks for a break down to the $5.33 area. For Craig Coberly of GSC Energy in Atlanta, support is lower, clustered in the $5.12-17 area consistent with Gann support lines drawn off the $4.98 low from April.

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