The seven week rally that began following May expiration, has left the gas market severely overbought and delivering multiple clues that suggest the spring rally has run its course. The decline in open interest is one of those clues. Higher price highs without increasing open interest indicating new buying support entering the market, is a form of divergence.
Higher price highs accompanied by lower volume is another (occurring the last couple of weeks) is one that has proved exceptionally reliable over the years. During week ending 05/24 3,387,217 contracts changed hands, this past week a higher high traded with 3,075,538. The high of $3.159 may not be the Q2 high but there is a growing body of technical evidence that will be hard for the market to overcome including in addition to the foregoing:
