You’ve got to like the “I will not be pushed” mentality exhibited by the market Wednesday. Less than 24 hours after Federal Reserve Chairman Alan Greenspan told Congress that the nation has a long-term gas supply problem, natural gas futures turned lower as traders liquidated longs in hopes of taking advantage of short-term bearish rewards.

Traders were mixed in their appraisal of Wednesday’s price retracement. While some pointed to technical factors, others maintained the selling was in anticipation of bearish storage data expected out Thursday morning. The July and August contracts dropped lower in lockstep, each shedding 11.7 cents to close at $6.213 and $6.303 respectively. At 74,720, estimated volume was average.

Last Thursday the Energy Information Administration reported a record-setting 114 Bcf increase in working gas levels for the week ending May 30. Looking ahead, the market is bracing for another triple-digit injection in Thursday’s update. Citigroup analyst Kyle Cooper is calling for a 101-111 Bcf injection, which would compare bearishly to an 88 Bcf injection during the same week last year, a three-year average increase of 88 Bcf and a five-year average of 87 Bcf. In order to reach 3 Tcf by Nov. 1, the industry has to inject 11.7 Bcf/d, or 81.9 Bcf/week, for the rest of the injection season.

However, storage was not the only price depressant Wednesday. Also at work, traders agreed, were technical factors that have turned negative. “The natural gas market may be seeing some technical weakness today, with July futures flushing through the recent support to set a new low for the month,” wrote Tim Evans of New York-based IFR Pegasus in a note to customers.

For Craig Coberly of GSC Energy in Atlanta, the market can expect a continuation to the downside. “The intermediate term outlook is for gas prices to move sideways to lower to partially retrace the 59 calendar day rally we’ve had from the April 3 low,” he wrote Wednesday. “Calculated objectives for this correction are $6.00, $5.80 and $5.61.”

However, Coberly is quick to note that this is only a correction and once complete, prices should rebound above the recent $6.63 high.

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