Plagued by an array of bearish fundamental and technical factors, the natural gas futures market continued a slow, methodical grind lower Tuesday as calculated scale-down, end-user buying matched up with commercial and speculative selling activity. After an early rally failed to attract much support, the September contract shuffled lower throughout the session to finish at $5.373, down a half-cent for the day.

Traders polled by NGI agreed that although there was little fresh news on which to trade Tuesday, the old story of plentiful storage and mild weather forecasts was enough to stem any potential rally. By notching a high and low at $5.445 and $5.335 respectively Tuesday, the September contract has etched a lower high and a lower low in each of the last five trading sessions.

“This is not a meltdown, but rather a slow, methodical erosion,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “What bullish case can be made here? Storage is getting filled and there is little or no weather in either the Rust Belt or the population centers.”

And while Kennedy does not rule out a rebound if and when the next tropical storm threat materializes, he is not ready to jump in on the long side based on the current outlook. “Sure there is a chance that Earl will redevelop, but even if it does it poses more of a threat to the Yucatan Peninsula and Mexico than to gas platforms in the central Gulf of Mexico. And sure there is another disturbance in the Atlantic Ocean, but it is so far out…talk to me about that one next week.”

In daily technicals, natural gas futures have support in connection with the $5.29 March low. A break below this level would bring the $5.06 low from February squarely into bears’ sight. On the upside, the market needs to walk before it can run and a first step would be to top Tuesday’s $5.445 high, breaking the downward trend on the daily bar chart.

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