The April Nymex contract once again failed to break above majorresistance at $2.19 on Tuesday, and as a result, the spot monthfinished the day down 3.2 cents to $2.137. Total estimated volumecame in at 34,371.

One broker said April has the potential to explode higher if itmanages to rise above its key resistance level. However, he feelsthat’s much easier said than done. “There are a lot of buy stops inplace above $2.19, but I don’t think April is going to get there.Why would you expect April to trade with March? It’s a verydifferent demand month. It’s really got its own set offundamentals. Just because cash market prices have gone up for acouple of days here in March doesn’t mean people should be payinghigher prices for 30 days worth of April gas,” he said.

The broker also thinks April will receive strong support at$2.105, as evidenced by strong fund buying each time the contracthas approached that level within the last several weeks. As aresult, he predicts “April will trade in a tight $2.105-185 rangeuntil it goes off the board.”

If that’s the case, there may not be many good buyingopportunities in the futures market. But the broker feels optionsare a different story. He noted the at-the-money volatility forboth May and August is around 34%, which makes August a potentialbuy. The hurricane season makes August a more uncertain month,which should increase futures volatility and therefore increase theoption price. “I’m guessing August volatility will be more like50%-60% by the time July rolls around,” he predicted.

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