After twice failing to break to a new seven-week daily continuation chart high, natural gas futures tumbled lower in the last 75 minutes of trading Thursday as commercial and local traders took profits notched during the bull run of the last 10 days. The April contract was the hardest hit by the late sell-off, giving back 7 cents for the session to close at $2.357. The out months slipped as well but by a lesser degree, which served to widen the market’s forward carry premium.

Cash prices, which finished trading earlier in the day, were mostly unfazed by the late decline in futures. The Northeast and Florida were the only regions of the country losing significant ground Thursday as temperatures there are expected to moderate into the weekend. NGI’s Henry Hub price was $2.48, flat from Wednesday’s average.

A delayed reaction to the bearish storage data was mentioned as a reason for the futures price slide by more than one trader contacted Thursday by NGI. The American Gas Association said that only 64 Bcf was pulled from underground storage facilities last week. Because expectations had centered on a 80-90 Bcf withdrawal, the news was dubbed bearish and many traders looked for a sell-off Wednesday. As it turned out, it was buyers that stepped up their efforts and the April contract finished Wednesday’s session on a positive note.

However, fundamentals were not the sole reason for Thursday’s retracement. Also at work yesterday were technical factors, which have switched from bullish to bearish over the last couple of days. Chartists are quick to note that there exists major trendline resistance in the low $2.40s. Add to that the fact that with its $2.465 high yesterday, the April contract notched a lower high relative to the $2.51 top from Feb. 22. On the downside, support exists first at $2.33, which represents the bottom of the short-term rising channel drawn on the daily continuation chart. A nickel lower, April’s 40-day moving average at $2.28 could prove to be a the breaking point for a renewed push down to April’s Jan. 28 low at $2.06. Below $2.20, scale-down buying is likely.

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