Volatility at the New York Mercantile Exchange has become so low the April contract was only able to trade within a narrow 3.5 centrange Tuesday, from $2.14-$2.175. The contract settled unchangedat $2.155.

The story among futures traders remains the same. According toone industry analyst, “the supply/demand equation is still in suchdelicate balance that April has been unable to fall below supportat $2.105. But because storage is plentiful, and because enoughpeople are long March gas, April hasn’t been able to rise above$2.205 either,” he said.

A midcontinent based marketer feels the fundamental outlookcould receive a new wrinkle from today’s AGA storage report.However, he warned it will probably be difficult to predict howtraders will react. “One preliminary storage estimate is in the130s to account for the cold weather that had people pulling fromstorage to forgo having to buy at last week’s relatively highprices. A number like that could lend this market somequasi-support. However, it will all depend on how the marketinterprets the price. Sure it would be a withdrawal from storagethat would more than triple last year’s 45 Bcf withdrawal but itwould still leave us with a sizable storage surplus year on year,”he said.

The wild card to all this may be the fact that speculatorsremain net short almost 4,500 contracts. A broker said thattypically at least 50% of these positions are in the spot month,meaning traders could expect speculators to close out nearly 2,250April contracts with buy orders. This may be enough to help propelApril above its major resistance level at $2.205, but since thisopen interest data are a week old, many of these speculators mayhave already covered these positions. “If technicals andspeculative buying are going to drive April much higher, it willmost likely have to be done by the end of this week,” he reasoned.

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