Fueled by follow-through selling on the heels of Wednesday’slate-day sell-off, natural gas futures dropped lower yesterdaymorning only to rebound slightly in the afternoon. A uniform1.9-cent loss was seen in each of the four front months, led by theJune contract, which finished at $3.107.

“It was the most bullish 1.9-cent loss I’ve ever seen,” said aHouston trader after watching the June contract climb its way off a$3.05 low. “The bears really needed to test $3.00 if they wanted tomake this move stick.”

However, Susannah Hardesty of Indiana-based Energy Research andTrading remains bearish and points to both technical andfundamental factors as proof. “Spec funds, who were big buyers onthe last upward leg, started to take profits [Wednesday].. They arealready in their maximum long position of 15% to 17% of total openinterest. Their exit from the market would be enough to driveprices lower.

“[Wednesday’s] AGA report came in more bearish than mostexpectations, at 32 Bcf. We might be starting a relatively normalinjection season after all,” she wrote in her Intraday Natural GasReport Thursday.

In daily technicals Hardesty sees critical support at $3.03. Adrop below that will mean filling the chart gap on the dailycontinuation chart and could spawn a wave of fresh selling. On theupside, resistance exists at the top of yesterday’s chart gap up to$3.125. If it is filled the June contract will see additionalselling at prior highs in the $3.20-235 area.

In after-hours Access trading the June contract had alreadytested the first level of resistance, trading up as high as $3.135by 5:30 P.M. (EST).

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