April natural gas futures rose as prices crossed an important technical threshold and traders anticipated additional buying. Petroleum and equity markets also advanced but traders were not convinced of a significant linkage with natural gas.

At the close April gas futures rose 5.8 cents to $4.340 and the May contract added 6.9 cents to $4.419. April crude oil rose $3.73 to $45.38/bbl and the Dow Jones Industrial Average rose 149 to 6,875.

“We got above $4.32, and maybe the market tests up to $4.55 to $4.60 by the end of the week. I think there will be some fresh buying come into the market and we will get a rally the next couple of days. There will probably be some fresh sellers up at $4.60,” said a New York floor trader.

The trader didn’t see much influence from the crude oil market on the rise in natural gas. “We really haven’t been following crude that much. The other day [Tuesday] crude was down over $4.50, and natural gas was only down a little over 4 cents. We seem to be disengaged. With everything up so strong today, it pulled up natural gas, but settling over $4.32 should lead to some more buying,” he said.

Others use a rough rule of thumb of 10 to one to gauge natural gas prices. “Crude oil has been holding north of $40 and natural gas has been above $4,” said a Washington, DC-based broker. He added that crude oil did get a boost from a supportive roster of inventory data, and noted a report from China that its industrial manufacturing was better than expected. The Energy Information Administration (EIA) reported that crude oil stocks fell 757,000 bbl for the week ended Feb. 27. Analysts had been expecting a gain of a million bbl.

For the moment the price linkage between crude oil and natural gas may seem confined to a loose ratio, but the relationship between oil demand (and by extension natural gas) and the strength of the economy is clear. “The bottom line is that a weakening economy is supposed to lead to weakening demand. When the [Department of Energy] releases demand figures that suggest growth rather than decline, the direct line drawn between a weaker economy and lower demand can be broken,” said Peter Beutel of Connecticut-based Cameron Hanover. “That battle lies at the heart of this market’s seeming inability to choose and stick with a trend recently. In the final analysis, the weekly demand figures will tell us which course prices are on.”

Natural gas traders will be studying their own estimates of demand in the form of Thursday’s 10:30 a.m. EST release of inventory figures. A Dow Jones survey of 15 analysts revealed an estimated draw of 98 Bcf, and a similar Bloomberg poll showed a median 90 Bcf withdrawal from a sample of eight industry observers. Industry consultant Bentek Energy, using its North American flow model, expects a withdrawal of 102 Bcf, and Stephen Smith and Associates is looking for a pull of 112 Bcf.

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