The natural gas futures market made it three in a row Tuesday as traders continued to lift prices off last Wednesday’s $5.96 low. The biggest boost was seen in the prompt July contract, which ascended 6 cents to $6.304. Less impressive were the out months, resulting in a modest 3.7-cent uptick in the 12-month strip.

Traders noted that the lackluster trading activity was a reflection of the paucity of trading signals available right now in the natural gas market. Aside from an area of unsettled weather in the Gulf of Mexico that garnered some attention Monday, the weather has been a non-factor. That, coupled with expectations for a uninspiring 80-95 Bcf storage injection last week (to be announced Thursday), is a recipe for a spate of summer trading doldrums.

Even the news of an Iraqi oil pipeline explosion early Tuesday was insufficient to rally the bulls in either the gas or crude oil pits at Nymex. After an initial spike to $38.40/barrel, the July crude contract finished the day at $37.19, down 40 cents for the session.

“The market put in a good bottom three days ago, but I’m not sure that I trust it,” said George Leide of Rafferty Technical Research in New York of the market’s slow slog to the upside. “It would take a settlement above $6.50 to prove to me that this market has put the downside momentum behind it.”

That being said, Leide looks for a two-way trading market and would not hesitate to sell the market on rallies and buy it on dips. Specifically, he points to the market’s failure at $6.40 Tuesday as a potential level of resistance. On the downside, Monday’s low at $6.17 may or may not stem a decline to the $5.91-92 area, he reasoned.

Calling the latest uptick nothing more than a wave four [Elliot] correction, Craig Coberly of GSC Energy in Atlanta now looks to the downside. “When we know where wave four peaks, we’ll be able to calculate probable objectives for wave five…If I were forced to pick an objective now, I’d argue for about $5.64,” he wrote in a note to customers Tuesday.

But like any good technician, Coberly also allows for the market to be irrational. “Closing above $6.44 would be ‘too much’ for a wave four corrective rally and closing at or above this level would give us a reason to search for a bullish alternate,” he said.

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