Following a slightly larger than expected 91 Bcf natural gas injection into storage for the week ended May 12, natural gas front-month futures on Thursday sank below the psychological and technical support level of $6.000 for the first time since Feb. 22, 2005, when the March 2005 contract recorded a low of $5.960. After putting in a $5.860 low for the day and the move, June natural gas closed at $5.997, down 13.2 cents.

June natural gas was trading at $6.010 just prior to the 10:30 a.m. EDT report. One minute after the report hit the street, prompt month natural gas had dropped 13 cents to trade at $5.880. The last time front-month natural gas traded lower was 15 months ago — almost to the day — when the March 2005 contract recorded a low of $5.850 on Feb. 17, 2005. Since the $15.780 peak of the Hurricane Katrina spike on Dec. 13, front-month natural gas futures have lost $9.783, or 62% of their value. The 61.8% Fibonacci Retracement price level stands at $6.028.

“The storage number was slightly bigger than expected. The surplus just continues to grow,” said Tom Saal, a broker with Commercial Brokerage Corp. in Miami. “I think there was some trade and fund selling once the number came out, and we will see if the buyers support this first venture below $6. We have not seen prices this low in well over a year.”

The broker said he would continue to keep an eye on the spreads between the front month and subsequent months. “The spreads between sequential months are enormous,” Saal said. “That could point to how short-lived our stay might be down at these levels.” He added that the trip below $6 could definitely trigger the buyers.

As an example of the large spreads, July natural gas closed at a 24.3 cent premium to June on Thursday, while the August contract closed at a 57.8 cent premium. September closed 97.8 cents above June, while February 2007 settled at a $4.953 premium to the prompt month.

While June natural gas settled just below $6 on Thursday, another broker said he wouldn’t make that big of a deal out of it. “I don’t see that as being very important,” said Ed Kennedy, a coworker of Saal’s at Commercial Brokerage Corp. Commenting on the fact that strong buying didn’t immediately greet sub-$6 prices, Kennedy said he still believes it is there. “The buying is there, just not in June,” he said. “Let’s see what happens on Friday to round out the week.”

Most industry expectations for the storage report had been focused around 83-88 Bcf. The actual 91 Bcf injection for the week outpaced last year’s 85 Bcf build as well as the five-year average injection of 82 Bcf.

As of this report, working gas in storage stands at an obscenely high 2,080 Bcf, according to EIA estimates. Stocks are a whopping 494 Bcf higher than last year at this time and 722 Bcf above the five-year average of 1,358 Bcf.

The East region injected 60 Bcf into underground stores while the Producing and West regions added 19 Bcf and 12 Bcf, respectively.

In Wednesday’s trading, June natural gas futures contract settled at $6.129, down 12.3 cents. Fundamental traders see little hope of higher prices. “With the weather being how it is, there’s just not a whole lot of gas usage,” said Carl Neill, an analyst at Risk Management Inc. in Chicago. “There’s really nothing bullish in the outlook. The weather is benign and storage is very high,” he said.

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