Buoyed by strong commercial buying, natural gas futures shuffled higher yesterday after overcoming an extremely negative first hour of trading in which prices broke beneath Tuesday’s low at $3.79. The July contract closed at $3.914, down 6.7 cents for the session, but more than 13 cents above its low for the session.

“If [Wednesday’s] bounce was fundamental, [Thursday’s] was purely technical,” a cash trader said after watching July futures march higher yesterday amid an unchanged weather and storage outlook. “We expected a little bit of a pop after the storage report was released, but I didn’t see this one coming.”

For local technician Ira Hochman, however, the key to yesterday’s price action was for the July contract to remain above his 1st momentum number at $3.75, which corresponds roughly to the high from the first hour of trading Wednesday. “Once it was clear we were not going below that level, buyers stepped in. My next momentum number lies at $3.97. If we can settle above $3.97, it could be the beginning of a nice correction,” he said.

However, many market watchers are still hesitant to call Wednesday’s $3.67 low a bottom. First and foremost, the market needs to get past a potentially devastating storage injection next week. While still 5 days away, cash and futures traders alike are already beginning to bet on a large refill. “I am short Chicago Citygate heading into June and I fully expect next week’s storage report to bail me out. This next storage report will cover Memorial Day Weekend, which is one of the lowest demand periods of the year.”

In daily technicals, July has major support at the gently sloping uptrend line at $3.52 and then again at the continuation chart low at $3.61. Buying is also expected at prior lows at $3.77-78 and $3.67. On the upside, resistance stands first at Wednesday’s and Thursday’s shared high at $4.01, followed by more selling up to the chart gap at $4.09.

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