After failing for the third day in a row to sustain a move beneath $4.20, natural gas futures rallied yesterday as traders began to cover shorts initiated during the recent price erosion. At the closing bell, the June contract was 14.6 cents higher at $4.348.

Traders were quick to point to the market’s inability to break support as a reason for first price advance in a week. Additional buying was seen as the market moved back above major trendline support off the June chart at $4.329, a source added.

Acknowledging that the robust rate of storage injections are pushing prices down in the near-term, Susannah Hardesty of Indiana-based Energy Research and Trading warned that as you go through the [injection] season, different fundamental factors push prices in different ways. And because prices usually trend higher during the second quarter, she calls the market’s recent move lower “contra-seasonal” and believes that prices are poised for a rebound.

As additional rationale, she looks back to 1995 when prices dropped 25% during the same timeframe. “If we project that percentage price drop in 2001, the low would be $4.20, and that’s about what we’ve done—we’ve repeated that drop down…. Now I need to look for bottoming action in here. I need to look for momentum [to the upside]. If we haven’t made the low in this market, it is very close and prices should begin to make their seasonal climb.”

Accordingly, Hardesty looks for the market to make a major high between May 21 and the end of June on a move to at least $6.00 to $6.50. “It could go as high as high as $8.00, but that’s only if weather conditions are very bullish,” she added.

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