Bulls and bears took turns yesterday in the gas pit at Nymex as light buying pressure throughout the morning morphed subtly into selling interest in the afternoon. As a result, prices did not stray very far from center with most months able to eke out minimal advances for the session. The July contract finished at $3.747, which was 1.3 cents higher on the day.

Bulls yesterday were pleasantly surprised by the market’s inability to continue lower following the Wednesday release of another large weekly storage injection. Several traders had targeted the May 30 low of $3.67 as a reasonable downside objective for the July contract Thursday. However, the downside risk still exists today and into early next week as many traders are already looking forward to next Wednesday’s storage report.

According to the National Weather Service, forecasted average U.S. cooling degree days for this week are expected to number a scant 56, down from 72 a week ago. For Tim Evans of New York-based IFR Pegasus, this presents a looming dose of bearish news on the horizon next Wednesday. “[This week’s injection figure] will be compared with a 73 Bcf refill from last year. Thus the storage surplus could grow by another 40 Bcf or so, putting even more downward pressure on prices.”

While there is no call for severe heat in next week’s forecast, there is some room for a bullish interpretation. According to the latest six- to 10-day forecast released Thursday, above-normal temperatures are expected across a large swath of the northern tier of the country extending from Maine to Montana and Wyoming. That however, is neatly contrasted by below-normal temperatures across the Gulf Coast states.

In daily technicals, support is seen at the aforementioned low at $3.67. If broken, follow through selling would likely lead to a free-fall down to a zone of support that begins at $3.45-50 area and extends down to $3.25, Evans said. On the upside, congestion at $3.95-96 should limit a bounce if failed support at $3.89 does not do the job first. Evans is currently short July from $3.87 with a protective buy stop pulled down to $3.97 to limit his risk.

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