After capturing back some of their recent losses in Monday morning trading, June natural gas futures plunged lower in the afternoon, sinking below psychological support at $11 to close out Monday’s regular session at $10.954, down 14 cents from Friday’s close.

The prompt-month contract hit a high for the day of $11.278 just before 11 a.m. EDT, but follow-through buying was tough to find and the move stalled. June natural gas traded lower from there, recording a $10.857 low at 2:15 p.m. EDT before inching higher to close.

Monday’s session also continued to highlight the recent split in direction by crude and natural gas futures prices. After trading generally in the same direction over the last several months, some independent movement has appeared over the last week and a half. On Monday June crude hit a high for the day of $127.44//bbl before recording another all-time record high settle at $127.05/bbl, up 76 cents from Friday’s close.

“Natural gas and crude futures have been singing different tunes over the last week or so and I think that will likely continue in the short term,” said a Washington, DC-based broker. “Using the Elliot Wave structure, both crude and natural gas prices were in the final part of a fifth wave advance. Natural degraded and started to break down first, but crude will at some point as well…as soon as it stops making new highs. All bulls eventually die; natural gas just went first this time.

“We became bearish on natural gas on Friday and trading on Monday brought confirmation. We started out higher early on Monday, which allowed the up-trend line to hold for a bit. However, that gave way later in the day, so now we have both pierced the up-trend line and had a bearish turn in our indicators. I think if we have some follow-through selling over the next few days, we’ll likely have one more brief rally to try to reattain the pierced up-trend line. That will likely fail because we are now in a bearish mood. The last hurrah higher should not make a new high, so I think we saw the intermediate top last week.”

Looking at support lines on the way to lower prices, the broker said the next point is at $10.500 and then down into the $9.30 area, which would be a 38.2% retracement of the move from $5.230 back in late August 2007 to the $11.794 from last week.

Going into Monday’s trading day, some said last week’s report of a 93 Bcf storage injection for the week ended May 9 fell right in line with expectations, and that concerns about refilling storage are unfounded. “The 93 Bcf build was right in line with the 86 Bcf [estimates], and I’m looking for supplies to reach 3.3 to 3.4 Tcf,” said Kyle Cooper of IAF Advisors in Houston.

Cooper said he thought the market had a slightly bullish slant last week, but “it has to be taken into account that we are at $11.10 and that’s a very high price. If crude oil ever got a brain, the market would be a lot lower, but that doesn’t appear to be happening. I think price-wise the market will be supported well for some time even though the supply-demand [balance] is not hugely bullish. I think the price fairly reflects that,” he said.

Very high price or not, buyers are waiting. Phil Flynn of Alaron says, “Buy June natural gas at $11.00 — stop $10.70.”

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