April natural gas futures tumbled as traders rushed to cash in on recent gains amid perceptions of market instability Friday. Futures prices at one point had the trajectory of a Saturday morning cartoon character falling off a cliff and traders noted that much of the selling took place late in the session as traders holding gains “bolted for the door.”

April futures tumbled 36.2 cents to $9.868 and May dropped 34.5 cents to $9.961. April crude oil dropped 12 cents to $110.21.

“The drop that occurred was a late Friday profit-taking session,” said a New York floor trader. He noted that it was the complete opposite in the morning. “You couldn’t find an offer on the back of the board calendar strips, but you could see a correlation between fund selling and other traders wanting to close out positions that were deep in the money. Traders wanted to lock-in to capital that they know exists,” he said.

The trader admitted that he was “in a complete fog as to what is going on with the economy.” One thing he was sure of was that the number of speculative longs in natural gas and crude oil was substantial. “I think you will see more of this same kind of market into next week. There is some size sitting in long positions that see events in the market and may be anxious to take profits.”

In addition to the large number of traders holding gains who may be spooked by economic or other external events there were technical market parameters now coming into play. “There are some serious downside targets the way the charts are shaping up. You could put in some thick trend lines and if the market got through $9.70 it’s definitely going to raise an eyebrow,” he said. He added that traders are concerned that “everyone could do a mad dash [sell] for the exit at the same time. It could be an interesting week.”

Weakness in the U.S. dollar may stem the tide of any massive selling. “There is a definitely potential for a major whack to this market if something squirrelly happens. There are also dollar-related issues with commodities in play. If the dollar continues to deteriorate and devalue then we won’t see a rapid fall, but there are definitely traders finagling the relationships of dollar versus crude oil and dollar versus natural gas,” he said.

Major market sell-offs often rely on emotions, and significant fundamental factors can get pushed aside. Short-term weather forecasts, however, may help stem the tide of any pronounced selling. In its six- to 10-day forecast MDA EarthSat noted a strengthening ridge expected to bring cooler than normal temperatures to populous gas markets east of a line from North Dakota to East Texas.

“The models begin to take different paths early on here in regards to the storm moving through the East and the evolution of the blocking in the North Atlantic,” said MDA EarthSat meteorologist Matt Rogers. He said the American weather model retrogrades the ridge west for a time, while the European model slowly moves it eastward. “The end result is for colder conditions to settle across the Eastern U.S. for a longer period than in Thursday’s outlook or in Thursday’s models.” Rogers also pointed out that confidence in its six-to 10-day forecast did slip slightly from Thursday. On a scale of one to 10, Friday’s forecast ranked five, whereas Thursday’s forecast tallied a six.

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