Shrugging off the urge to cover short positions, natural gas futures traders added to Friday’s sell-off Monday as they pressured the expiring July contract to its lowest level in two weeks. With that the July contract completed its tenure as prompt month in undeniably bearish fashion, slipping 21.2 cents to close at $6.141. At 88,613, estimated volume was light for an expiration-day.

Traders were quick to note that although considerable, 3.4% slippage in natural gas prices fell short of the 3.5% decline in the nearby crude oil trading pit. “Softness in the crude pit gave gas sellers the green light Monday,” a broker said.

However, natural gas has a bevy of bearish fundamentals on its own and may have funneled lower regardless of what transpired in the trading pits of its hydrocarbon brethren. Specifically, market watchers are pointing to mild weather forecasts and rapidly filling storage supplies as having a price depressing impact on the market.

“There is a lack of cooling demand and a sufficient [quantity] of physical supply,” said Tom Saal of Commercial Brokerage Corp. in Miami. “This market will likely crest 2 Tcf [in storage] in the next couple weeks. Clearly the anxiety over supply is fleeting.”

Saal may have a point. At 1,845 Bcf as of June 18, gas in storage was only one Bcf less than the five-year average level and 280 Bcf above the year-ago mark. Looking ahead, Kyle Cooper of Citigroup in Houston calls for a build last week in the mid- to upper 90s. If realized, a refill of that magnitude would trump the five-year average injection of 82 Bcf, resulting in a surplus for this year over the five-year average tally.

“A build in [the mid- to upper 90s] will continue to underscore, in our opinion, a supply demand balance very much in line with historical averages.” And while Cooper notes that there exists a fair amount of fear over this balance when the mercury rises across the country, he concludes that there is nothing to suggest an extreme price move [to the upside] is justified.

In daily technicals, the August contract is at a crossroads on its first day in the prompt month spotlight, according to Craig Coberly of GSC Energy in Atlanta. Specifically, he points to the $6.20-21 area and the existence there of Gann support drawn off the February 24 low. “Breaking and consolidating below this support line would give us very strong evidence that the bearish outlook is correct,” he wrote in a note to customers Monday.

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