May’s tenure as prompt month in the natural gas pit has not gone all that well for the bulls. Although there have been good days when prices ratcheted higher, most of the month has been a downer as prices tumbled from the $5.74 high — notched on April’s expiration day — down to beneath the $5.00 level Wednesday. It was only fitting that the May contract continued to slump on its expiration day Thursday. At the closing bell, the May contract limped off the board at $4.891, down 9 cents for the day and a whopping 84.9 cents off its March 28 high.

Although May prices finished convincingly lower, it was not clear that would be the case until late in the session Thursday. In fact, on two occasions it actually looked like moderate scale-down buying would lift the month above unchanged on the day. Traders believed that a push above Wednesday’s $4.981 close would lead to futures buying by options players who no longer needed to hedge their $5.00 puts. May touched the $4.97 level shortly after 2:30 p.m. (EST) but was once again beaten back by fund and commercial selling.

Looking ahead, traders are mixed on whether June will follow in May’s footsteps or rebound higher to stay within the trading range that has confined prices for two months now. With fundamentals slightly in their favor, bears were pleased to see technicals also turning their way Thursday. According to Peter Hattersley of New York-based Rafferty Energy Group, the May contract dipped briefly below a major trendline on the daily continuation chart. Formed by connecting lows reached in April and then again in November 2000, the up-sloping trendline has defined the market’s downside potential for a little more than year on the daily continuation chart that intersected Wednesday’s market at the $4.85-87 area. The May contract touched that level at its $4.85 low, closed modestly above it.

Insisting that the trendline support is still in place until broken on a settlement basis, Hattersley will use it as a trading tool heading into the weekend. “You’ve go to be a buyer as long as June stays above that line. However, you should look to sell on a close below the line,” he said.

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