Choosing to expire much more like a lion than a lamb, April natural gas futures caught fire in Tuesday afternoon trading, jumping up to reach a high of $7.40 before expiring at $7.323, up 32.4 cents on the day.

The move caught a number of traders off guard as morning trading was rather lackluster. However, others said the fact that the market was unable to get below $6.90 — despite repeated tries in the last few days — pointed to a possible move to the upside.

“The screen was showing signs of something coming all day,” said Steve Blair of Rafferty Technical Research in New York. “We had major support between the $6.90 and $6.93 level and we got pretty close to that in morning trade with that $6.96 low. The market seemed stuck between $7.01 and $6.97 for the longest time, but once we got over that $7.02 level, the market really never looked back.

“I can’t say that I view this jump higher as anything fundamental,” he added. “Storage is still what it is. I certainly haven’t heard or seen anything that would explain the sudden increase. I think the whole thing was a big technical bounce. I think some people might have been caught trying to get short under $7.”

Blair said he wouldn’t be surprised if people were putting on some length when the market really took off. “I would be really hard pressed to think that the move was all short-covering,” he said. “The market has really shown a propensity to not want to stay under $7, no matter what market fundamentals are saying.”

IFR Energy Services’ Tim Evans said Tuesday’s action saw the natural gas futures market shift abruptly into a short-covering spike, “taking advantage” of the “lack of downside follow-through” and the thin trading volume ahead of Thursday’s Energy Information Administration (EIA) storage report. “We’ve not seen any more dramatic news such as a pipeline incident to account for the move,” he said. “We think the market is just saying, in effect, ‘not yet.'”

Taking over as the newly minted prompt month, May natural gas futures increased 28 cents to settle at $7.402.

Evans said the May contract is currently rivaling the $7.52 peak from March 17 and may look to probe for more buy stops beyond that cap. “We see some further opposition in the $7.60 area in conjunction with the top of the daily Bollinger Band,” he said. “Back to the downside, a retreat below $7.30 or so would calm the waters inside the recent range, while failure to hold $7.20 would put pressure back on the $7.06 floor from Monday. Overall, we think the market has postponed a larger decline, [and] we see a larger scale top still in development.”

Evans said he believes Thursday’s natural gas storage report may show a mildly supportive 40-50 Bcf net withdrawal, which would outpace the 24 Bcf five-year-average withdrawal as well as last year’s 25 Bcf pull for the week.

He added that without any cold temperatures on the horizon in the near term, it would appear that the heating season is in the process of coming to an end. “We have noted the potential for a focus on summer air conditioning demand to take hold as a longer-term focus, but again we see no particular trigger in today’s news flow to trigger the advance now,” he said.

Weather bulls may indeed have to switch their focus from heating degree days to cooling degree days. The Old Farmers Almanac says that “April will be pleasant, with well-above-normal temperatures and well-below-normal rainfall. Expect summer-like warmth in the month’s second week. May will be near normal.”

Data from the National Weather Service is consistent with that of the almanac relative to the lack of cold temperatures. Traders anticipating cold this week will have to adjust to a below-average tally of heating degree days (HDD). The NWS forecasts below normal levels of HDD for the larger gas-consuming areas of the U.S. For the week ending April 2, the NWS expects sub-par HDD for both the Mid-Atlantic states of New York, New Jersey, and Pennsylvania and the East North Central states of Wisconsin, Illinois, Indiana, Michigan and Ohio. The Mid-Atlantic is forecast to receive 126 HDD, 28 below normal, and the East North Central 112, 48 off a normal pace at this time of year.

The industrialized East North Central may end up with a warmer April than the Mid-Atlantic. At the weekly HDD rates above, the Mid-Atlantic could be on track to receive close to its normal April tally of 496 HDD. The 112 HDD weekly sum for the East North Central, however, is off the 510 normally accumulated in April, according to NWS figures. The monthly norms are based on a 1971-2000 average.

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