Anyone who thought that the meager 0.1 cent gain the June Nymexcontract turned in on Tuesday would lead to a boring expiration daywas dead wrong. June managed to spew out one more major pricedecline on Wednesday, as the contract went off the board down 7.8cents for the day to settle at $2.017.

Naturally, position squaring ahead of expiration had a bigimpact on trading, but so did the latest AGA storage report, abroker told GPI. The report came out at 92 Bcf for the secondconsecutive week, and that added another 16 Bcf to the swellingsurplus to last year. “I don’t know how many more of these 90sstorage injections we’ll be able to take. $2.00 gas is starting tolook in serious jeopardy,” the broker concluded. The surplus versusthis time last year now stands at 453 Bcf.

July also suffered a big hit yesterday, as it fell 7.2 cents toclose at $2.046. And according to Susannah Hardesty, President ofEnergy Research & Trading, Inc. of Greencastle, IN, July may bein for further short term weakness. “The next five days arecritical for the July contract. If July gets down below $2.00during this time frame – say it hits $1.99 – then it’s very likelyit will continue lower,” she said.

However, Hardesty feels any such down move would probably belimited. “From looking at it [the July contract] technically, thereshould be difficulty getting much lower than $1.90. In fact, weshould be going up to a final peak of the spring which should comein the middle of the month. Maybe July will reach the $2.45-55area, but that’s just a ballpark figure,” she said.

Hardesty went on the say that although speculators are currentlynet long more than 12,000 positions, this only constitutes lessthan 6% of total open interest. She feels this is a “neutral”figure, and added that she starts anticipating speculators to covertheir positions once their portion of open interest reaches 10% ormore. So even though the daily July technical chart is somewhatoversold, speculators may still have room to add to their shortpositions in the days ahead.

On the other hand, the aforementioned broker believes that “if$2.03 holds, July could rally up from here, and if it takes out$2.14, it would be a W bottom. But the trend is still down, soyou’ve got to continue to sell rallies,” he said.

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