If bullish natural gas futures traders became excited when theMay contract moved above the $2.70 mark yesterday morning, theirenthusiasm was tempered following the spot month’s daily close of$2.689. Although this represents a daily gain of 2.1 cents, onetrader is concerned that futures prices will be falling in the daysto come. “I was hoping a break above $2.70 would lead to a move to$2.80, but traders seemed pretty quick to slam the door. It lookslike profit taking has started ahead of the long holiday weekend,”he said. The New York Mercantile Exchange will be closed for GoodFriday.

The concern that trader expressed may be even greater now,following the release of the latest American Gas Association (AGA)storage report last evening. The AGA estimated that working gas instorage increased by 53 Bcf last week, and traders responded bydriving May down more than 3 cents in Wednesday night Accesstrading. “That could help perpetuate profit taking, especially ifMay moves below major support at $2.605,” an analyst told GPI.

However, another source pointed out that May should receive somesupport from current cash prices. Since carrying costs should placeMay futures at about a 10 cent premium to April cash, the Maycontract should only fall so far, he reasoned. “Demand is prettygood around the country right now, so I don’t expect current pricesto fall too much, even though we are going into a long weekend,which is typically marked by less demand,” he said. GPI’s DailyHenry Hub index is currently $2.64.

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