With little in the way of fresh fundamental or technical developments, natural gas futures slid sideways and lower for the second day in a row Tuesday, as traders elected to remain mostly on the sidelines ahead of fresh storage data to be released this afternoon. The May contract closed 4.7 cents lower at $5.078.

A slight up-tick at most cash market locations was the only bullish factor in an otherwise featureless trading landscape, several traders told NGI yesterday. As a result, the market took the path of least resistance and that was down, as traders continued to factor in the potential for a big storage refill season.

While it will take the market a month or more to know whether storage refills are on pace to take stocks back up to the 3,000 Bcf benchmark, market watchers are still eager to extrapolate what they can from today’s storage report. Expectations ahead of that announcement received a boost Tuesday when the market got hold of several large marketing companies “internal numbers” that estimate as much as a 50 Bcf injection. On the lower end of expectations, New York-based IFR Pegasus looks for a net refill of 15 to 30 Bcf. Last week the American Gas Association announced a whopping 64 Bcf refill. Alternatively, last year at this time, the market only put 19 Bcf in the ground.

However, for one Houston-based risk manager, it will be storage with a twist, as today is also expiration of May options. “With 8,000 put options at the $5.00 level, a move below $4.95 could create a cascading price effect as the sellers of those puts delta hedge those positions by selling May futures. For each half-cent move below $4.95 you get another wave of [futures] selling,” he said.

For that reason, he believes that if bears are successful taking the market beneath the $5.00 level by the 2:00 P.M. (EST) storage release, sell-stops will whisk the market lower from there. Below psychological support at $5.00, May has double bottom support at $4.92. Lower still is the recent continuation chart low at $4.87.

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