No surprising last week that June gas was well – bid into expiration and June was the fifteenth straight contract to enjoy increased buying during the last few days of its prompt life. What was surprising that the last support took prices through the early May high for June gas. The recent trends have had support tested after the start of trade month and last month was no exception as, June gave buyers a chance to buy weakness when it plunged from the aforementioned early calendar May high. As long as the tend and process of higher lows and higher highs (a primary characteristic of a longer term trend and discussed here for several months) continues it is likely that there will be a brief correction to the July prompt in the coming weeks. Whether it falls $2.566 (like prompt June gas) in less than three trading days, remains to be seen.
History tells us there is a consistent pattern that brackets Memorial Day Holiday. That pattern has, prompt gas setting a high between mid/late May and then declines to an early/mid – June low then rallies toward an early summer high. The average of the declines since ’00 is 11% – 12%. The 10 – year average of rallies from June lows is 16.65%. From the high traded last week at $9.447 to the low on May 27th ($8.285) represents a 12.3% decline well within the average. Not stating that the Holiday low has been established, but the current decline has met the average decline.