What goes up, must come down,” was one trader’s description ofyesterday’s late sell-off in the natural gas pit at Nymex. However,a more appropriate expression might have been “what can’t keepgoing up, must come down,” because after pressing through stubbornresistance at $3.20 Monday morning, the June contract hadlanguished on either side of $3.20 for two days, unable to attractmuch in the way of follow-through buying. That range-bound tradingcame to an abrupt end Wednesday when fresh storage data wasreleased. The June contact finished down 9.1 cents at $3.126.

According to the American Gas Association, 32 Bcf was injectedinto underground storage facilities last week, bringing stocks upto 1059 Bcf or 32% full. At face value the 32 Bcf worth ofinjections was neutral to even a little bearish, as it not onlyfell short of last year’s 34 Bcf build, but also the six-yearaverage of 57 Bcf. Even the consensus of brokers and wire serviceswas focused on a 20-40 Bcf refill Tuesday afternoon. However, byWednesday morning those predictions were being abandoned in favorof fresh estimates, issued and used internally by large marketingcompanies, calling for only 5-17 Bcf in net injections. “When thoseestimates failed to materialize, we saw a wave of commercialselling,” said a Houston-based risk manager.

Whether the market was expecting a five or 40 Bcf injection islargely academic now, but what still concerns traders is thesomewhat precarious position of the June contract. “I can make thecase for prices to move to $2.80 or $3.50 from here. If we were tomove back above the $3.20 level, there is very little to slow amove to $3.50. However, if support at $3.10 and $3.00 fail to hold,we could easily retrace to $2.80. It is scary to be either a buyeror a seller up here,” he reasoned.

In daily June technicals, support is seen at the convergence ofthe June 40-day moving average and trend line support in the $3.00area. On a rebound, resistance exists at previous highs in the$3.20-235 area.

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