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Technical Bulls Taking A Pause; April Called 4 Cents Lower

April natural gas is expected to open 4 cents lower Wednesday morning at $3.05 as traders see little near-term change in ongoing weather forecasts capable of lifting prices and the technical picture momentarily stalls. Overnight oil markets fell.

Weather forecasts overnight changed only modestly, with much above normal temperatures extending from East Texas to the Ohio Valley during the six- to 10-day period. "Most of the change in this period comes from the Mid-Atlantic to the Northeast, with the early parts of the period being warmer under a less aggressive push of high pressure into areas east of the Appalachians," said MDA Weather Services in a morning report to clients.

"While the Mid-Atlantic is expected to hold on the warm side of normal for most of the period, a nearby cooler air mass has the forecast scaling back the warmer anomalies into the Northeast from mid to late period. Changes were small most elsewhere, with much aboves remaining favored in the southern Midwest and across the South. The West features generally near normal readings overall."

Evidently Tuesday's advance through the previous high wasn't enough to satisfy market technicians working the bullish case. "On one hand, I am not surprised to see a pause after Monday's sharp rally," said Brian LaRose, a market technician at United ICAP. "On the other hand, I am a little concerned that the bulls were unable to push through the previous high at $3.089.

"To keep the case alive for a run to $3.232-3.258 or even $3.432-3.449, bulls need to generate a rally Wednesday. Would be prepared for another dip to the $2.880 vicinity if the bulls cannot follow through."

Tom Saal, vice president at FCStone Latin America in Miami, in his work with Market Profile expects the market to test Tuesday's value area at $3.097 to $3.063. Saal pegs the initial balance for the week at $3.113 to $2.958, and should April futures break out of that range, he looks for trading objectives higher at $3.191 and lower at $2.881.

In its Early View storage survey conducted Friday The Desk's survey of 10 traders and analysts estimated that Thursday's EIA storage report will to show an average withdrawal of 149 Bcf, well above last year's 13 Bcf injection and a five-year average pull of 21 Bcf. The survey had a range of -140 Bcf to -160 Bcf.

In overnight Globex trading May crude oil fell 71 cents to $47.53/bbl and May RBOB gasoline lost a penny to $1.6094/gal.

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